Dissecting Causes Of One-Year Anniversary Of Last Major Crypto Sell-Off

First catalyst, bitcoin cash hard fork was in its final stages, Bitcoin ABC (BAB) & Bitcoin SV (BSV)
Second catalyst was Bitfinex (BFX) banking issues that came to a head
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day

CRYPTO MOVERS AND PRICES

 

 

CRYPTO STORY OF THE DAY

This Week Marks A Year Since The Last Major Crypto Sell-Off That Would Ultimately Lead Bitcoin (BTC) To Multi-Year Lows - We Provide A Recap & Insights

The move began on November 11, 2018, with bitcoin (BTC) falling as much as 12% in 24-hours. Ultimately, the activity would see BTC touch what are now +2-year lows below USD 3,300 on December 14. The 50% decline in just over a month brought the BTC 14-day RSI to its lowest reading ever. Unsurprisingly, crypto was highly correlated through the period and just about every coin suffered major losses. ETH, for example, declined ~75% over the period, also making lows around December 14. XRP, for its part, dropped ~50%. Notably, while BTC is now +30% beyond Nov 11, 2018 levels and was up as much as 100% from there in 2019, ETH is just about flat and XRP has never come back to prices from 11/11/18.

Crypto Takeaway: There were two major items we painted as the catalysts for the November 2018 decline. First, the bitcoin cash hard fork was in its final stages and Bitcoin ABC (BAB) & Bitcoin SV (BSV) would ultimately start trading on Nov 15, 2018. The break was highly contentious among the two sides and represented an acrimonious split between of one of crypto's best-funded and most highly supported communities. The second catalyst was Bitfinex (BFX) banking issues that came to a head. After months of highly delayed fiat banking, BFX would ultimately institute major penalties and then halt withdrawals altogether. The exchange was and still is, one of the world's most important fiat onramps and the move sent their crypto prices to huge premiums versus other spot exchanges. This reduced confidence in crypto as a whole but had other knock-on effects such as disturbing various index prices and complicating the lives of market-makers / arbitrageurs. We have consistently pointed to exchange stress as a factor in crypto-price weakness and the events related to BFX in November 2018 were some of the most severe in the last 4-years.

About the Author

FRNT Financial is an Institutional Brokerage which offers clients a variety of products along with research & analytics in the crypto-space.