November marked the wildest month for the bitcoin market this year. The bitcoin price opened the month at $328, hit a high of $500 then fell back into the low-$300s all within the first 10 days of the month. The price drop was followed by a consolidation phase that saw the the price hold major support in the $300-$315 range before rallying significantly in the final week of the month to close at $375.
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To put this volatile price action in perspective, bitcoin was trading in the mid-$200s in September and much of October. In fact, the price of bitcoin didn’t break $300 until October 27th. Long-term support has now been firmly established in the low-300s, a range that served as a major resistance level for most of 2015.
November Bitcoin Market Moving Events
November BITcoin Market Moving Events summary
|11/4||Wedbush Securities revises 12-month price target to $600||+1.1%|
|11/5||Final US Marshal Services bitcoin auction completed||-7.1%|
|11/11||UK Chancellor of the Exchequer states that digital currencies could play a big part in finance||-7.6%|
|11/12||Visa Europe announces blockchain remittance Proof of Concept||+6.9%|
|11/23||Microsoft cloud computing platform, Azure, adds Ethereum blockchain as a service toolkit||
|11/26||Bitcoin exchange trading volume hits all-time daily high||+7.6%|
|11/30||Report states that Barbados Central Bank should consider holding bitcoin||+2.0%|
Three Things to Watch in December
China’s Renminbi Approved as Major World Currency
The Chinese Renminbi has been approved by the IMF to be a part of the basket of currencies that make up the Special Drawing Rights (SDR). In order for the yuan to be included in the SDR, China has made economic reforms and increased Central Bank transparency. As a result of economic reforms, the Chinese have allowed the yuan, which floats in a very tight predetermined band vs USD, to loosen.
As the yuan depreciates versus USD, onshore purchasing power will continue to erode. The yuan’s reduced purchasing power coupled with capital controls preventing money from leaving the mainland makes bitcoin an even more viable method for moving assets. This is a trend to follow into 2016 as more and more Chinese citizens look to move money out of a depreciating currency.
Scaling Bitcoin Conference
The last Scaling Bitcoin conference drove down the price of bitcoin as the trading community saw a lack of progress in reaching consensus on the block size debate. Conversely, the latest conference (which wrapped just prior to publication) has drawn positive reviews. Early reports suggest that there was a lot of constructive discussion and collaboration on key issues impacting the future of the Bitcoin industry, including block size. This is reflected in the price of bitcoin which is testing the $400 short-term resistance level and could help boost trader confidence over the final three weeks of the year.
December Federal Reserve Meeting
It is almost guaranteed at this point that there will be a rate hike. This would mark the first-time bitcoin has been traded in a non zero-interest environment. The impending rate hike could create high volatility among speculative assets, commodities and the USD. As such, traders should prepare for volatility in the bitcoin market over the coming weeks.