The raging month of November
Now let's go back in time a year, to 2020. Or, if you want to be more specific - November 14th, Cue Ball Horror Day. On that day, its price fell below significant 2020 support at $6,000 and set the rate for a 50% decline within one month.
This particular month tends to be very volatile for Bitcoin. Along with what happened in 2020, November has traditionally been a very positive month for cryptocurrency.
Mati Greenspan, senior analyst at eToro, sees some reasons why this November could also be promising:
“The crypto industry is now more mature than ever before and growing rapidly. "Xi Jinping's endorsement of Blockchain has generated a lot of interest in the market, as have new Bitcoin futures options from some of Wall Street's biggest players."
“November has historically been a very volatile month for BTC, and this month could be as promising as ever,” said noted Bitcoin analyst Tony Weiss.
What does the Bitcoin exchange rate depend on?
Although Bitcoin is often compared to stocks or bonds, there are still significant differences. There is no corporation behind Bitcoin, which means there are no public balance sheets about the financial condition of the company to draw conclusions about the prospects of investing in it. Also, monetary policy, monetary inflation, etc. are not applicable to Bitcoin.
It follows that the value of cryptocurrency is formed due to a combination of such factors:
- Competition. Of course, Bitcoin is the most famous cryptocurrency, but besides it, there are dozens of other currencies and tokens, and each wants to win the interest of users. In terms of market capitalization, BTC still dominates by a large margin over its closest competitors.
- Supply and demand. The cryptocurrency protocol allows for the creation of a fixed number of new coins. New BTC appear on the market when miners form blocks from transactions, but the speed of their creation gradually slows down. Also affected is the total possible number of coins in the Bitcoin network - 21,000,000. Once they are all released, the price will depend on how easy it is to use BTC in various transactions, how legal and in demand this coin is.
- Use on exchanges. The more popular a crypto exchange becomes, the easier it is for it to attract new participants. And having “captured” a significant part of the market, it can dictate its own rules for adding certain currencies. If an exchange lists Bitcoin, then in most cases it complies with regulatory requirements, even though cryptocurrencies still operate in a gray area.
- Mining costs. Although bitcoins themselves are virtual, their mining requires very real electricity. During the mining process, complex mathematical problems are solved. The one who first brought the solution receives all the transaction commissions accumulated since the mining of the previous block, plus a portion of new coins. The more participants connect to the mining network, the more difficult the task becomes to maintain the conditional 10-minute interval between mined blocks. And accordingly, more electricity is consumed.
- Stability of management and forks. A fork is a change to the underlying software that results in the creation of a new currency on a separate blockchain. A soft fork is a minor change in the network that does not lead to the fork of a new currency. Bitcoin has no central authority and security is entirely up to the miners and developers. Forks usually split the Bitcoin community and create problems that need to be solved.
- Legal and regulatory issues. Regulators cannot decide how to classify such virtual assets. The Securities and Exchange Commission (SEC) classifies cryptocurrencies as securities, while the US Commodity Futures Trading Commission (CFTC) classifies BTC as a commodity. There is also a trend in the market towards using crypto as an underlying asset for futures, exchange-traded funds, etc.
The BTC market is also dependent on many other things, the news background. For example, if the government of a large country speaks out against the regulation of cryptocurrency, the price will fall (this was the case with China). The value also fell when the drug trading site Silk Road, which accepted BTC as payment, closed down. In some cases, the price can be deliberately driven down by “whales” - large traders who sell large volumes of cryptocurrency.
Time Machine
Let's take a metaphorical trip back in time and see how Bitcoin prices performed in November, starting in 2012 when the first crypto exchanges emerged to allow BTC trading. The data refers to exchange veteran Bitstamp.
- year 2012
The price was quite low in November, but this is also due to the fact that Bitcoin was not really popular back then. The month opened at $11 and closed just above $12, up 13%. However, the price candle saw a wider range: $10.25 – $12.74.
- year 2013
The first major Bitcoin bubble, followed by the cryptocurrency with 460% monthly growth. Bitcoin started the month trading at $204 and ended at $1,150. It took 14 months of bear market to get back into the $200 price zone.
- year 2014
November was a great month for Bitcoin, which rose from $310 to over $450 in a matter of days. However, things went downhill a bit from there and the month ended with the cue ball closing at $380, which was still a nice gain of about 25%.
- 2015
November was quite similar to the previous one. In fact, the month started trading around $300 again and rose to 470 in the first few days after showing a similar pattern and retracing to 370.
- 2016
The price has been a real rollercoaster ride. There were numerous fluctuations of around 10% in November, all of them sudden and over the course of a few days. However, after all this, Bitcoin started at $710 and ended at 730, marking a minor gain.
- 2017
This has been a landmark year for Bitcoin as it reached its current all-time high in late December. This move, however, built on a spectacular November that saw Bitcoin rise from 6,400 to end the month at $9,300.
- 2018
And finally, we now come to the sad turn of events of the past year. This year was bad enough, and November was the first negative ROI in seven years. After Bitcoin saw a monthly high of $6,544, it fell to $3,474, losing 47% of its value. The month closed with some optimism, above $3,900.
To sum it up - 6:1 in favor of the Bulls in consecutive November achievements since 2012. But the bad taste of last year's only bear
November still remains.
What awaits Bitcoin in November? Upcoming halving and BTC price movement forecast
The Bitcoin (BTC) rate has good prospects in November, as many supporters of the first cryptocurrency believe.
The coin ends October in good positions; Bitcoin is now trading in the range of $9000-9400, having recovered the positions lost at the beginning of the week.
Over the past eight years, BTC has only declined twice in November. Between 2012 and 2020, November was consistently a strong month for BTC. Last year, in the last month of autumn, the coin lost 37%. 2020, especially its second half, turned out to be unsuccessful for the cryptocurrency industry.
But in previous years, BTC during this period reached new highs, experts say. An important event in the history of the largest digital currency will be the reduction of the reward for Bitcoin miners in May 2020.
The so-called halving in November 2012, for example, became the starting point for Bitcoin to reach new heights. The miners' reward was then halved from 50 to 25 BTC. A possible decrease in miner activity has increased investor interest in the digital asset. As a result, Bitcoin soared from $5 to $16 just three months before the halving.
In 2020, the reward for miners decreased from 25 to 12.5 BTC per block. During the four months before the halving of four years ago, the cryptocurrency surged from $360 to $780.
The reduction in the reward for mining a block from 12.5 to 6.25 BTC in May next year should also be a determining factor in the growth of the coin. It is possible that November of this year will be the starting point for a more confident and lasting expansion.
Many Twitter users believe that the approaching halving will lead to Bitcoin soaring to approximately $55,000, and the capitalization of the first cryptocurrency in this case will reach $1 trillion.
#Bitcoin #bitcoin $BTC $Btc $btc @PaweeelekMlody @100trillionUSD
The model predicts a bitcoin market value of $1trn after next halving in May 2020, which translates in a bitcoin price of $55,000
?⚡️?⚡️?⚡️?⚡️?⚡️?⚡️? pic.twitter.com/OI1itJftwm
- pabloCRyptO??? (@PaweeelekMlody) October 26, 2020
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BitcoinExpert Forecasts
November 2020: What to Expect
This year we entered November after a memorable October with notable price action. After weeks of consolidation, Bitcoin fell to $7,300 in a matter of hours, but a few days later it gained 42% to reach $10,350. The market recovered to $9,200-$400 and has remained fairly quiet since then.
Of course, it's worth noting that previous price action should not be taken as an indication of what's to come. This is what Carl Eric Martin, better known as popular YouTuber The Moon, said:
“I believe the big November move is coming. However, I do not rely on previous price action to reach this conclusion. The reason the big move is coming is because Bitcoin's previous huge 40% surge has penetrated the 200-day moving average. I was one of the few people who was still bullish before the big spike, and I was predicting an increase of at least $11,500 even before the spike,” The Moon said.
But not everyone believes in the Magic November theory.
Greenspan sees it the same way he sees any other day. He also said he had not seen any convincing evidence that a particular day of the week or month was more important, concluding that "if November is anything like October, then that's just great." Share:
