BITCOIN MARKETS, WEEK OF JUNE 23 – 30
This week, bitcoin continued its steady run up from 3 weeks ago; up from $219 to a high earlier today at $269. After encountering resistance at $259 2 weeks ago, price retraced in a consolidatory fashion, while firmly respecting support on $240. This level was to form a solid base for a second attempt at breaking higher, culminating in a strong push past $259.
In previous analyses, I always look at price movement relative to the peak ($315) and bottom ($166) using fibonacci retracement levels. While in the past 2 months the range was between 61.8% and 50%, the market is now in a new range – a lower limit of $240 and upward level of $260. After today’s breakout, price is approaching 200 day EMA on 1 day charts that coincides with $270 level. The 50 day, 30 day and 100 day are well below, acting as support for the bounce up.
“We are sitting in the trough of a six month accumulation range at a weekly double bottom, and flirting with big technical milestones like the long term downtrend line and the 200 day MA. Any rally from here is going to be very powerful, shorters beware.”
2 indicators in particular have turned market sentiment to excitement:
- Price crossed above the 200 day simple moving average, for the first time since August 2014 when it last crossed below it.
- Early signs of a break of long term log downtrend line going back to the height of the bubble, $1200 high in 2013.
While there seems to be a lot going for this resurgence, coupled with general market optimism of a real shot at breaking out of the 18 month bear channel, some of these signs resemble a 55% upswing back in June 2014
“… we had a very similar set up in June ’14 already: SMA 200 broken, weekly close above SMA20, and the then most plausible log downtrend line was decisively broken a few days before. [. . .] price fell back below the SMA200, struggled a bit, then broke down entirely.”
So, what is the price outlook?
BITCOIN FUNDAMENTAL NEWS
Kraken Bitcoin exchanges launches in Canada
Coindesk reports Kraken, San Francisco based bitcoin exchange, has launched its operations in Canada, expanding its global presence from Japan and Europe. CEO, Jesse Powell, spoke of the opportunities in the Canadian market, and their plans to offer fiat ETF and interac e-transfers denominated in CAD and trading fees priced between 0.1% and 0.35%.
Bitcoin talk amid Greece debt crisis
Via story, CNN claimed Greeks were rushing into bitcoin after a set of capital controls were imposed on them, following a disagreement on terms with the IMF and EU. It reported an increase in online traders from Greece as far as out as Chinese exchanges (40%), as much as 10 times on Bitcoin.de in Germany and 79% on Bitstamp.
Fortune magazine however, was of a contrarian opinion, instead, attributing the simultaneous rise in price and crisis in Greece as purely coincidental. According to its evidence – Euro purchases of bitcoin as per transactional volume data remain unchanged, Google searches index by region ranked Greece nowhere in the top 15 and ‘normal’ volatility was observed on bitcoin markets.
“any uptick in Greek users on our service was unlikely to affect price,” instead, musing any perceived connections as “mostly psychological” remarked CEO of Vaultoro.
Side note, commentary
The financial situation in Greece, the EU and China have made decent fodder for bitcoiners. In Greece, capital controls kicking in and money transmitter companies such as Western Union closing shop for a week, opened up a massive opportunity to make a case for bitcoin in the global economy.
Meanwhile, Shanghai stock exchange fell 14% early last week, adding speculation, such as this blog post from BitMex, on Chinese market stability and possible inflows into bitcoin.
“Greece is just a sideshow. The real action is happening in China. The PBOC is engineering a financial asset bubble in an attempt to mitigate the inevitable slowdown in the real economy.”
BITCOIN WEEKLY PRICE FORECAST
Considering all that is going on, speculation that Greece could adopt Bitcoin, or what have you, is likely to give impetus to upward price moves, however, it is not a realistic expectation. Already, it seems to have fueled attention and put a spotlight on the fact that a country could possibly freeze bank accounts. This would not happen with Bitcoin.
“A large break like this usually pushes price much higher. I am expecting 280-300 in the following weeks.”
Prices will likely push higher in the coming weeks, reiterating targets stated previously – $ 270, $280 up to $ 300; realistic estimates under present conditions. It certainly won’t be a sharp rise, rather expect it to be gradual with retracements at intervals for profit taking and consolidation. Likely, one down to $240 zone – a correction of the larger move from $219 to $ 269 as shown below.
Zooming out further, we have broken out from a triangle with a flat base at $ 200 and a hypotenuse extending way back to $ 304; reflecting a high probability further move up.
Finally, for perspective, a visual of the 18 month bear channel points to where we are now. Creeping up between 2 purple dotted lines approaching the thick red upper trendline of a larger channel. Currently, price is above the red dotted line and is approaching the thick red line at $ 280. Looking back at previous attempts, it will take immense buying pressure to cross it. Therefore, expect some period of accumulation before having a go at it. Fortunately, analysts are bullish
“It is fair to assume that this is the beginning or midterm of a significant correction of the entire downtrend.”
Needless to say, I have revised my expectations of lower lows after factoring recent market data.