Santa Claus was a no-show for world markets in 2018. Cryptocurrency held up remarkably well in relative percent decline terms during the period versus world equity markets. After hitting a low price for the year of US$3129 on December 15, $BTC and the alts market recovered quickly showing strength amidst declining volume through year-end. We saw a full $BTC market price retrace of 83% from December 2017 ATH which is consistent with the absolute bottom of prior bitcoin cycles.

November was crypto’s worst month since April 2011. On the surface, the most significant event was without question the Bitcoin Cash network split and hash war.

November saw a meaningful uptick in SEC enforcement action globally, and a fresh emphasis on the part of various exchanges to bolster AML/KYC practices. This type of “clean-up” may have had a slight dampening effect initially as unverified market participants are cut off, but improvement in the professionalism, accountability and integrity of trading platforms is clearly bullish for the next wave of adoption and growth in the medium-term.

I also note the macro risk-off environment across other asset classes; however, I have seen signs over the past 6 months of inverse correlation between $BTC and U.S. equity markets that support my belief in cryptocurrency as a safe haven when investors panic flee equities en masse (bonds also) and the U.S. Dollar loses its luster.

Bitcoin volatility trended at historic lows even while equity markets saw increased volatility to the downside. A split in the $BCH network is looming for November 15th as a civil war in the bitcoin cash community has resulted in competing factions’ determination to implement different protocols during the scheduled hard fork. Even though bitcoin is now in its historically bullish season (October – December), a prudent investor would wait for meaningful follow through with volume in recent upward price momentum before deploying additional capital into the market.

Bitcoin prices traded in a tightening range between US$7300 - $6200, where higher lows continued to hold but price struggled to make a new higher high. Most alternative cryptocurrencies traded below August lows to test support levels dating back to October and November 2017. From a technical perspective, a major move seems imminent.

In August, the 2018 bear market (or downtrend) showed some signs of concluding, consolidating and reversing. Fundamentals such as market infrastructure investment, technological progress and regulatory developments have strengthened this year.

However, with regard to asset prices, cautious retail speculation has been a driving force downward along with sudden moves and reversals triggered by large players. Intra-day extreme volatility picked up at the end of the month and has continued into the first week of September.