Category: Trading tips

Is 420 the new floor for Bitcoin?

Bitcoin sure likes to blaze it or so it would seem. The price is back around the 420 area where it reached in November 2015. Ever since the Mike Hearn news, Bitcoin has been struggling to break the $400 resistance, but it finally managed to do so just in time for Valentine’s day and while most speculators on BitcoinTalk tend to agree that this is the new floor for the crypto, I’m a little worried about the head and shoulders pattern that’s forming on the hourly charts.

Head and shoulders on 1H

As I’ve stated before I’m a Bitcoin permabull and would love to see the cryptocurrency rise to an all time high this year. I was super excited to see the breakout on Valentine’s day, but it’s possible that this is about to turn south real quick due to the formation of a very popular chart pattern known as the head and shoulders. Have a look at the chart below to see what I mean.

head and shoulders pattern on bitcoin

A great source for learning, Investopedia, explains it pretty well. Basically if the neckline is broken, we can expect a more serious downward movement to take place. Right now it doesn’t look like the neckline is broken just yet, but it’s definitely getting closer due to the selling power increase as indicated by the red bars at the bottom of the chart.

Fundamentals bearing more weight

There’s been plenty of good news on the media surrounding Bitcoin lately and it’s the main reason the cryptocurrency is rising right now. I’ve also noticed that the technical traders are getting burned more often than before with not just trading Bitcoin but pretty much everything else.

For example the popular forex pair EUR/USD surprised many seasoned technical traders this year with a massive surge upward and while I’m not qualified to really speculate on the matter, I saw a very influential trader post on the Forex Factory forums that technical trading is getting more and more difficult to the point where it no longer makes sense to be involved at all. So perhaps the 2016 financial crisis will remove most technical traders out of the equation for Bitcoin as well?

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Bitcoin breaks the 400 resistance as identity of its founders is revealed

Bitcoin just broke the 400 usd barrier shortly after rumors about the revealed identity of the Bitcoin protocol founder were released on the internet. According to Wired and Gizmodo, the mysterious man behind Bitcoin, Satoshi Nakamoto, is in fact an Australian  entrepreneur Craig S Wright.

bitcoin 420 usd blaze itBitcoin stable around 420

The sudden $16,50 USD jump in Bitcoin price quickly found stability around the 420 USD per coin area today where it has been hovering for pretty much the entire day showing signs of further upward momentum.

Is Craig S Wright really Satoshi?

The evidence provided so far can’t be used to conclude that Craig S Wright is Satoshi Nakamoto and in Wired’s case, the evidence was presented with extreme caution. There is still a very high chance that the claim is simply false.

The raid at Wright’s house

Shortly after the news release Craig S Wright’s home was raided by the Australian police showing that they aren’t taking any chances. The Guardian reported that a total of 10 agents were seen searching for evidence on cupboards and areas of the garage. The police entered Wright’s home on Wednesday afternoon merely hours after the release of previously mentioned news articles and even though officially the raid isn’t related to the revelation, you can’t help but wonder if they are trying to cover something up.

Let’s wait and see

Only time will tell if Craig S Wright really is the mastermind behind Bitcoin and the Blockchain technology, but the market has already reacted very strongly despite the fact that for now we are dealing with nothing more but speculation at this point. Given the fact that such rumors can move the price up so fast, I would be wary of trading the cryptocurrency for a few days or at least until we figure out what’s really going on.

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Bitcoin just hit the $420 mark and it doesn’t look like it’s stopping

The last time we saw Bitcoin around these levels was exactly one year ago in November 2014. We were just coming down from a down trend correction that peaked at $667,530 on the 25th of May as people were desperately trying to get rid of their remaining coins and we had no idea where it would stop. Then, less than a month later we finally hit the bottom at $200 where the price remained solid for almost a year, continuously dancing between $260 and $198.

Strong news to back it up

BTC USD Price November Rise ClimbThe first thing that comes to mind when you look at such a chart is obviously that someone’s trying extra hard to manipulate the prices for their own evil profit. I thought so too until I read the following news:

Bitcoin to become the 6th largest global reserve currency by 2030

The above article talks about how global banks are super hyped about the Blockchain technology that Bitcoin is running on and how they have already invested billions of dollars into it. They are finally taking this new technology seriously enough and who can really blame them? It’s a lot more secure and simply a better way to transfer funds than the traditional system we currently have. The article fails to show the relevance of Bitcoin in all this, because as you know, Blockchain is *not* Bitcoin, but there is more!

Chinese Yuan 15-20% devaluation by 2016

Since China is a global giant such news are definitely going to change a lot. The article talks about how China already devaluated their currency in order to help exporters and more devaluation is imminent. The current price rise of Bitcoin is almost entirely made up of money flowing into Bitcoin from China so people are already getting ready for a serious meltdown by the looks of it. This reminds me how Kim DotCom tweeted in August suggesting people to buy Bitcoins now and thank him later.

Regulated Bitcoin exchange, Gemini, set to launch

Gemini is the world’s first legal and regulated Bitcoin exchange with its headquarters located in New York, USA.

Cameron and Tyler Winklevoss, famous for their legal spat with Facebook founder Mark Zuckerberg, launched bitcoin exchange Gemini on Thursday. While the currency has received criticism for its role in exchanges such as online black market Silk Road, the brothers contend they have established sufficient safeguards to unlock its potential.

Bitcoin now treated legally the same way as money

Bitcoin can now legally be treated the same way as real money after a court ruling on Thursday which stated that Bitcoin transactions are exempt from VAT (value-added tax). That alone is enough to raise the price of Bitcoin considerably for obvious reasons. Even the oldschool investors who didn’t care about Bitcoin before are now looking into this tax-free investment.

Panic buyers fueling the price further

Given all the positive media fuss around Bitcoin lately and seeing the price skyrocketing in a matter of days has got a lot of people standing on their toes right now. The value of Bitcoin rose from $328 up to $420+ in a single day today as more buyers are jumping on the train, thus fueling the rally even further.

$500-$600 a very real possibility

In one of my previous posts I was quite skeptical about the price moving anywhere above the $450 area and even though I still believe we are going to see some resistance at the $454 area, it looks like Bitcoin is just getting started and we have only seen the tip of the iceberg right now. Basically any correction, especially the one that should happen around $454, will be a good entry point for a LONG position from now on.

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Bitcoin holding steady over the highest point ever in the year 2015

In my previous post about Bitcoin I said that breaking $300 was important, but that was only important because it’s a nice round number and human beings like these sort of things. The actual level that needed to be broken was $304,3 which was the highest point Bitcoin had ever been this year and sure enough it managed to not only break this level, but stay above it steadily for more than 24 hours. As of right now, Bitcoin has not been this expensive in the entire year of 2015 so things are looking rather good!

BTC USD 1D Chart Graph

Unlikely a pump and dump

Given the fact that this rally is happening slowly and steadily makes me very confident to say that we’re not dealing with a plain old pump and dump right now. Of course, I could be wrong, but a pump and dump usually happens a lot faster unless the whales are trying a more careful approach this time. Also we shouldn’t underestimate the buying power of China because apparently they’re the ones mostly responsible for this.

Price manipulation or not, I have closed all of my LONG positions for now because nothing can climb so high without falling down at least a little bit. The candles are indeed getting wider, but that’s all the more reason to believe that we are going to max out very soon.

We can see further indication of an imminent correction by looking at RSI which is currently showing a strong overbought market at 87.8%.

Highest value in 2015

Throughout the year we have witnessed Bitcoin climb from $230-$250 lows up to $300 and coming back down again. This happened on two previous occasions until finally in October 2015 we managed to break the old barriers and stay afloat above the highest point from July. As of right now Bitcoin’s value is the highest it has ever been this whole year.

Big expectations

A lot of investors from Bitcointalk.org are being overly optimistic about the current price movement and are throwing around numbers as big as $500, $600 and even higher. I unfortunately don’t share that enthusiasm because I can’t simply ignore all the technical analysis data which is showing the current price increase as nothing more but a mere correction in an overall down trend when looked at from the 1W and 1M time scales.

It is my estimate that if indeed we continue the bullish run, it won’t reach higher than $450-$475 before coming back down again hard.

Only one thing can change my estimate and that is when Bitcoin can successfully close this week’s candle outside the 1W Bollinger Bands which have been contracting since April. We could be dealing with a major breakout should this happen and given that we only need to survive one more day, it’s a very likely scenario.

Halving in less than a year

Bitcoin block halving is estimated to take place in less than a year from now and when it happens the rewards from solving a block are reduced from 25 to 12.5 per block. This is significant because it could very well be the end for Bitcoin as we know it. Why?

Because small time miners have been selling their Bitcoin mining rigs and/or switching to other, more easily mined cryptocurrencies for a couple of years now. What do you think will happen if suddenly the reward for solving a block gets halved when it’s already barely profitable to mine for most miners?

The most logical thing to happen is that the few miners that we have left are going to dump all their hardware, move to a more profitable crypto currency or quit mining altogether.

When exactly is the halving going take place? Nobody can say the exact moment, but Bitcoin Block Half has a fairly good estimate.

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Bitcoin’s struggle to break the $300 USD barrier continues

While it’s true that the Bitcoin, at least in theory, should continue to climb against the USD in the coming weeks and months, we are once again finding some serious resistance from the $300. The most recent rally found resistance around the $296 area to be precise and when we look at the overall movement of the crypto currency through the entire year of 2015, we will see that it’s not the first time this has happened.

BTC USD 2015 Year Chart 1W Time Frame

Breaking $300 is key

When you look at the chart above, you will immediately notice that we are right now testing the $300 barrier for the third time this year. First being in March and second, slightly higher move in July. It seems that the number 300 acts as a solid psychological resistance level where most of the day traders pretty much chicken out and start pulling their profits, thus lowering the value of Bitcoin.

Third time’s the charm?

It’s interesting to see that in July the buying power was slightly stronger than in March and although it ended with a more serious selling, it can still give us clues what to expect from the current rally. It’s very likely we are going to break the 300 this time around, but will it hold for good? Only time will tell. We can still stay quite positive just by looking at how green our current rally has been. Sure, we can expect some drawback soon, but right now it doesn’t look like it’s going to be anything drastic. Don’t forget the awesome fundamentals that are most likely responsible for the rally in the first place!

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Filed under: Bitcoin, Finance, Trading tipsTagged with: , , ,

Why the Bitcoin price started to rise in the second half of October?

Bitcoin has been struggling to stay above 230-240 USD for months ever since the bears washed away all of our expectations in August, but now, Bitcoin has started a new rally and what’s really exciting about this are the news. We have some serious and strong fundamentals to back up the technical analysis which is already indicating a clear breakout. Here’s why Bitcoin started to gain suddenly in the second half of October.

Corrupt FBI agent charged with extortion

Carl Force, a former FBI agent who was working undercover to help take down one of the biggest illegal marketplaces online, the Silk Road, was charged with extortion, money laundering and obstruction of justice. According to Reuters, In August 2013 Force conned the owner of Silk Road to pay him $50,000 USD in Bitcoins claiming he had inside information regarding the investigation.

Chinese banks interested in Blockchain technology

The banks in China have unofficially shown interest in the technology behind Bitcoin. A lot of rumors started to go viral from this to the point where some people believed China had unbanned Bitcoin completely which is still not the case. While private parties can hold and trade bitcoins in China, regulation prohibits financial firms like banks from doing the same. Nevertheless, such rumors will always fuel a good buying frenzy.

Gemini Bitcoin exchange launch

The Winklevoss twins who sued Facebook’s founder Mark Zuckerberg for apparently stealing their idea, used their “hard earned” millions to start a new and very promising Bitcoin exchange. You can read their official questions and answers Reddit page for more information.

Bitcoin tax-free in Europe

Bitcoin can now legally be treated the same way as real money after a court ruling on Thursday which stated that Bitcoin transactions are exempt from VAT (value-added tax). That alone is enough to raise the price of Bitcoin considerably for obvious reasons. Even the oldschool investors who didn’t care about Bitcoin before are now looking into this tax-free investment.

btc usd price rise 2015 octoberLong story short

Less Bitcoins will find their way into the wild now thanks to the corrupt FBI agent.

The Chinese and Europeans are hoarding the coins for their own personal gains bringing the price up even more.

Gemini is providing the first serious and regulated Bitcoin exchange service which will help build trust.

It’s still early to predict where the rally is going to find resistance, but it’s clear that we are only just starting to see Bitcoins true potential.

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Bitcoin price continues to tumble in the second half of August, 2015

Bitcoin started off August with a selling spree and while the price did stabilize for a week, we are now seeing even more intense selling taking place in the second half of August, 2015. As of right now all indication of a bullish market is now lost and the bears have won the battle.

Bitcoin value is decreasing

Bitcoin value decreasing daily chart bearishWhen you look at the daily charts you can see that the Bitcoin keeps testing for lower and lower points. The last mass selling on the 19th of August closed the market at $218,693 and even though the next day was bullish, there was not enough buying power to recover from such a deep drop.

We even touched the $211,050 area for a brief moment which likely indicates that another similar drop can happen in the coming days.

 

MACD and RSI oversold

MACD and RSI oversoldThe MACD and RSI indicators are both showing pretty extreme oversold conditions, but despite that Bitcoin is still falling further. This has lead me to believe that the suspicious drop to $194,922 was indeed some form of a price manipulation and the overall market has just started to react accordingly. It’s sad, but who can really blame the people when the Bitcoin price is so easily manipulated? All it takes is an entity with a big enough Bitcoin wallet.

Who owns the most Bitcoins? The FBI of course. We don’t want to say it, but we’re all thinking it… oh and just FYI, I am not blaming the feds for this one, it’s more likely the BTC-E who is responsible for the last insanely fast price drop. It didn’t happen on any of the other exchanger charts.

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