Cryptocurrencies are notoriously volatile – but there have been some patterns and trends emerging over the past few years. The problem is that crypto prices are not affected by the traditional factors that move the forex market. They are influenced more by sentiment, emotion and mood more than economic factors and can experience huge highs and lows.
Last winter saw a chill spread through the crypto sector due to online advertising bans by some of the biggest names. However, spring sprung some good news, with several popular cryptocurrencies seeing steadier movement in a positive direction. This has certainly led to hopes for the summer.
Bitcoin continues to rule the roost as the most popular cryptocurrency. It is also a favourite for crypto CFD traders. In fact, Blackwell Global, which has recently launched the largest crypto CFD offering with 15 different digital currency pairs to trade in, also lists Bitcoin among the most popular constituent of crypto CFD pairs.
For Summer 2018, most expert predict that Bitcoin would continue to recover, with potential for 150% growth in value from the levels seen by the end of the first quarter. Ethereum too is expected to be “hot” this summer, with market analysts predicting a gain of about 24% through the summer quarter, as compared to ETH’s price at the start of the year. In fact, ETH could gain as much as 110% by the year end.
However, not all cryptos are expected to see a sunny summer. For instance, Ripple hasn’t been doing too well so far. And, while experts are forecasting a price increase, it is likely to be quite a modest rise of about 10%. However, over the longer term, the price is expected to decline by the year end by as much as 15%.
Litecoin, on the other hand, has witnessed slightly lower volatility, with predictions of a 15% increase in price by the end of the summer quarter and about a 50% increase by the end of 2018.
The Typical Crypto Cycle
The past few years have revealed that cryptocurrency prices do follow a cycle, despite all the volatility. Prices usually begin the year strong, followed by a major correction. This bearish trend usually lasts till late spring, with a slight bullish uptick as spring ends. The summer months tend to see a flattening, although we haven’t seen the summer doldrums in cryptos, unlike traditional forex trading. Prices start to rise once again with the onset of September, with each year ending in a bullish market.
Of course, there are multiple theories about why cryptos have been seeing this cycle in recent years. Many believe that it has something to do with families getting together and discussing things during festivals, such as the Chinese New Year, which has been associated with a sell-off in Asia during late winter or early spring. Then there is the November buying in the US, which has been linked to the Thanksgiving holiday.
Things are, however, likely to change going forward, with cryptocurrencies receiving much more mainstream attention than ever before, along with higher mainstream media attention. Then there is a lot of institutional money that is being invested of late in cryptos, like Soros Fund Management announcing in April 2018 that it intends to start trading digital currencies. In addition, the Ethereum network seems to have worked out the kinks in its scalability, which is likely to drive better adoption of Ethereum-based alt coins.
Of course, just as the crypto market is beginning to seem slightly more predictable, things might just change. So, if you are trading cryptos or crypto CFDs, always stay updated with the latest news and developments in the space.
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