News Bitcoin price technical analysis, what the charts are saying

Bitcoin price technical analysis, what the charts are saying

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charts trader screen
A
trader looks up at charts on his screen just before the end of
trading for the day on the floor of the New York Stock Exchange,
November 18, 2013.

Lucas
Jackson/Reuters


  • Bitcoin crossed $10,000 for the first time this
    week.
  • While everyone was paying attention to $10,000, the
    important number was $11,400, according to Fibonacci
    resistance. 
  • The charts suggest bitcoin’s surge could continue after
    a rough patch.

 

This week we saw Bitcoin breach the $10,000 mark and continue in
a near-vertical ascent that has some people scratching their
heads and others celebrating their incredible
gains. We’ve covered Bitcoin in January 2017 and many of
the fundamental points covered are still valid. We tackled supply
and security – two of the main issues – and the associated
arguments, so it’s worth revisiting that post for a reminder.

As certain countries in the world experience crises of various
types, cryptos and Bitcoin in particular emerge as top choices
for protection. There have been considerable flows from countries
like Russia and China, where cryptos have been used as a vehicle
to take funds out of the banking system and essentially make them
vanish. Pretty much from their inception, cryptos have been one
of the easiest avenues when it comes to such needs, and also for
the dark web (the infamous Silk Road website being a prime
example of that). There have also been cases where rampant
inflation makes having fiat money a particularly bad carry trade,
with obvious examples being countries such as Venezuela and
Turkey.

So, there have been good reasons why cryptos have been the target
of funds over the past few years and why they have
experienced this monster rally. To put some perspective, here is
an interesting table of Bitcoin price progression:

$0000 – $1000: 1789 days

$1000 – $2000: 1271 days

$2000 – $3000: 23 days

$3000 – $4000: 62 days

$4000 – $5000: 61 days

$5000 – $6000: 8 days

$6000 – $7000: 13 days

$7000 – $8000: 14 days

$8000 – $9000: 9 days

$9000 – $10000: 3 days

$10000 – $11000: 1 day



Bitcoin


Forex
Analytix


This kind of price action is very rare and as a result there have
been varied reactions to it. The disbelievers call Bitcoin a
bubble and are adamant that there is no fundamental reason why
it’s going parabolic. Bitcoin price action actually resembles the
Dutch Tulip mania of the
17th century, and this is something
they often refer to in order to justify their negative view. They
are usually particularly offended by people saying that “Bitcoin
is backed by mathematics” and setting massive arbitrary price
targets.

On the other side of the fence we have the hardcore crypto fans
who believe that total crypto-currency market capitalisation
should be in the tens or even hundreds of trillions of dollars.
They think that blockchain technology and cryptos are the future,
and that potentially they will eventually replace fiat
currencies. They accumulate cryptos (the ultimate goal being to
accumulate Bitcoins in particular) and are on a buy-and-hold to
infinity mode.

Then there are the people in the middle who are open to the
concept of cryptos and understand the value behind the
technology, but who also find it very difficult to assign a price
to this product. I myself am in this last category; I’ve been
watching Bitcoin’s rise in amazement but I never got certain
enough of it in order to trade it. I have well and truly missed
this trade and I accept that. I personally believe that
blockchain technology is here to stay and crypto-currencies could
be the future of money. However, I’m still not convinced that the
current crypto-currencies are the ones that will survive. As
total crypto market capitalisation rises, governments and central
banks start to take notice. It’s possible that we will see
government-backed cryptos in the future that could well take
a big chunk of the total market cap. As a currency, Bitcoin
has severe limitations when it comes to transaction capability.
The recent hard fork with Bitcoin Cash seems to take care of that
problem but it’s still unclear how well it’s equipped to properly
take on established fiat currencies.

So, what do I think will happen to crypto prices – and Bitcoin in
particular – in the near future? Its price has taken off and is
breaking ATHs practically on a daily basis and this is something
that I would never want to go against, so I wouldn’t be shorting
it here. An interesting development that will affect Bitcoin
price is the introduction of Bitcoin futures on the CME. This has
been discussed extensively in the marketplace and once again
there are two differing opinions on it.

One view is that this is a bearish development, as it will
provide an easy way for traders to short it. There are currently
ways to short Bitcoin, but they are not as simple as shorting a
futures contract. I can see the logic in this, but I personally
think that there is a much bigger reason why Bitcoin futures will
actually push the price higher:

There have been many individuals who want to invest in Bitcoin
but who are put off by the complexity involved, and also by the
security risk. You need to get a digital wallet, preferably a
physical piece of hardware. Then you need to get very good
anti-virus protection and make sure you have backups. Do all that
and you could still potentially be vulnerable to hacking. Cases
where cryptos are hacked or stolen are multiplying and this is
surely putting people off. Bitcoin futures will provide a
platform where getting long Bitcoin becomes extremely simple, and
for this reason I believe that the initial reaction to the
introduction of this future will probably be bullish. It’s my
opinion that Bitcoin will continue to rise going into year end,
as the CME future gets introduced. However, there will have to be
a point where there will be a major correction. Bitcoin price
will no longer be subjective and driven purely from capital flow,
but it will also have to somehow represent intrinsic value. This
is something that Bitcoin longs need to be very careful of, and
plan their contingency strategy accordingly.

Stelios Kontogoulas

The Harmonics point of view:

The whole market has been talking about when bitcoin would
reach 10,000 but the weekly Fibonacci resistance was at 11,400.
It is very common in Bitcoin at big levels that the market is
expecting to pause just below it or at it and suggest it has
stopped going up.

Then longs start to sell and some even short sell and then
bitcoin pushes through the level, everyone thinks it is a
breakout, jumps in long. And then the market reverses straight
back through the level. This is a very bearish reversal signal.
Trend support is the 0.236 Fibonacci retrace level from the
2015 low and then below that we are in a bigger correction and
can look to 7132 and the 0.382 retrace next. In terms of
harmonic patterns we are looking for a three wave (two swings
lower) move before we see bitcoin turn higher again.

Nicola Duke



Bitcoin


Forex
Analytix


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