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How much will be bitcoin worth in 2019?

28 Dec 2018 14:36|Bartosz Grejner

"This year's price drops on the cryptocurrency market significantly reduced bitcoin's price. Currently, the largest cryptocurrency costs only half of the average price for the whole year. How much will it cost in 2019? There are some reasons why optimists may assume that it will be worth much more next year," writes Bartosz Grejner, Conotoxia Analyst.

In many ways, 2018 was not the best year for cryptocurrencies. For bitcoin (which represents slightly more than half of this market) it was a very mixed period of time. Although its average annual price (until December 18th this year) of about 7.6 thousand USD was the highest in history, the current value of about 3.6 thousand USD, is even less than 50% of that average. What is worse, it is also below the average price recorded in 2017, which was 3.9 thousand USD (data according to Bloomberg).

Taking into account bitcoin’s value with which it approached the next year, it can be expected that the average price in 2019 will be below the 2018 level if it does not increase quickly or increase several times in the next 12 months. An intriguing fact is that a similar situation once occurred in the last eight years, four years ago to be exact. In 2014, it was around 317 USD at the end of the year and was also below the average for the whole year. Additionally, the average for the following year was at that time half as low.

A similar scenario may also take place in the coming year and would not necessarily be bad at all. Why? The prices of cryptocurrencies in the subsequent years, until the turn of 2017/2018, grew at a very fast pace. Even if the average bitcoin price in 2019 will be lower than the mentioned 7.6 thousand USD, still the most popular cryptocurrency might have a positive year. Rapid price increases and decreases observed a year ago are not a typical feature of a "healthy" market. A moderate, gradual increase in value in 2019 may be something that bitcoin really needs, especially after the turmoil of the last 12 months.

This gradual maturation of the market may help to increase the involvement of institutional investors. An element which is currently missing and which would most likely bring cryptocurrencies to life. It would help the ICOs and mining industry to get into a higher gear. Although this is still a drop in the ocean of market needs, the interest of investors gradually increased in 2018, even though prices fell gradually.

At the end of 2017, two Chicago markets - CME and CBOE - introduced bitcoin futures to trading. The first one clearly dominates (approx. 17,000 more open positions), but the total volume increased during the year. In Q2 it increased by 17% and Q3 by 12%. The fourth quarter is likely to be the first one in which there will be a decrease in activity. This is a result of the recent, rapid drop in cryptocurrencies prices, but also the turmoil in the global market. These include substantial changes on the equity and commodity market at the end of the year, which shifts investors' attention to this direction, as their involvement there is much higher.

Although growing futures trading on the US markets did not translate into higher bitcoin valuation in 2018, its further increase in the new year may have an impact on price stability and, similarly, on the whole market's condition. Events from previous years suggest that there is a high probability that the price of bitcoin will be above this year's average, i.e. 7.6 thousand USD at the end of 2019. This would be more than double the current level. This is nothing special for cryptocurrencies. Cryptocurrency devotees may believe that history will repeat itself in this case, although of course, we should consider the high volatility of the market and unanticipated changes it is known for.

28 Dec 2018 14:36|Bartosz Grejner

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