In the past 2 weeks, the price of Bitcoin made a surprising run up, breaking past the famed $600 level to a $630 high. The market was awakened after a prolonged dull sideways trend, and drew out traders now calling for a run up to $700. All was going well until September 12, when a sharp sell off down to $594 caught the market off its guard. Lots of traders were caught offside on over leveraged long positions.
“Sorry man….can’t guard against a drop like that too well. There’s just no way to protect yourself against that kind of volatility at 20x.”
There was better news on the fundamental front as mainstream financial institutions warmed up to bitcoin.
On the last analysis, I expected a low probable break upwards, but had given up on the long awaited break to $620. Sideways trends that drag out tend to exhaust traders and fuel uncertainty. $575 in hindsight was the last low, before the bull momentum to $638 which upset my high probability bear break. The 2 hour chart below highlights the sell off that followed.
We’re currently floating around the $600 area which is not just a psychological level but also serves as very important structure level.
As long as the trend holds, this sharp sell off could be a shake out low, before resuming an uptrend. $600 level is a significant level of resistance, that required consolidation before breaking above in on September 5th through 8th. Similarly, a retrace from $594 may be another consolidation to reassert a support. Your mileage may vary on how low a second dip is necessary. Price trending within this range could last a while too.
The Elliott Wave forecast I was watching from the BitFinex hack sell off kicked in, readjusting the trend and a target of $650.
“We know there is a bottom here because of the triangle. We know abc’s retrace at least 62% as a strong guideline. Not to mention that the abc could have been a wave ii of sorts.”
Admittedly, the retrace to C dragged sideways for a while. The market in response has turned bullish overnight judging by the fair targets of $700 to $780 coming out of investor forums.
“700 is a fair target, 700-800 range is asking a bit much from a guideline. Somewhere between 700 and 780.”
Masterluc on Analysis says this cup and handle pattern below is brewing on the weekly time frame and could shoot up in any time to a top at $700.
At least in the short term, the outlook is skewed to bullish, especially with price above the 100 and 200 simple moving averages.
Spanish Bank Santander Backs Bitcoin in Brazil
Banco Santander, has published a report recommending bitcoin as an innovative alternative for slashing payments costs and settlements times for Brazil’s financial services industry. Titled “Brazil : Banks & Financial Services: To Bitcoin Or Not To Bitcoin?.”, the report concedes the industry will be confronted by the challenges and opportunities emerging from this digital currency.
“We believe that the question in this report’s title will eventually be answered with a resounding ‘Yes, to bitcoin.’
Bitcoin seems to be a good fit for off shore payment processing in emerging markets. Few mainstream financial institutions have publicly backed bitcoin.
“Although we believe the potential impact of a broader acceptance of bitcoins to be more of a long-term issue, we acknowledge that “long term” in the technology world can sometimes go by in a flash.”
Deloitte Launches its own Bitcoin ATM
Deloitte’s, one of the world’s Big Four Accounting firms, launched its own Bitcoin branded ATM at its Toronto office this week. This public launch followed a stealth mode pilot under its Rubix blockchain division that was initially limited to employees only. Canada is already home to 110 Bitcoin ATMs, the most across the world.
According to BankingTech, the firm has been active across its other divisions in New York, UK and Luxembourg developing a shared ledger regulatory transaction reporting concept, bank to bank settlement using Ripple and smart identity powered by blockchain.
Italian Tax office to tax Bitcoin Speculation activities
Italy’s top tax authority is considering taxing speculative trading of bitcoin in which money is made in sales or purchases. Bitcoin activity beyond the scope of speculative trading will not incur income tax, in line with a ruling by EU court excluding bitcoin transactions from VAT. But new information from Agenzia Entrate released, points to to classification of bitcoin as a form of currency.The Italian law however, strictly does not recognize cryptocurrency such as bitcoin. According to Coindesk, this will add to uncertainty for businesses in the digital currency space.
Bitcoin Weekly Price Forecast
This week I am cautiously bullish. I will be watching how the $600 level holds, and going up as bullish as $650 for now. A revaluation will be necessary at $650 where a larger fractal resistance lies.
My caution is
Unless we break through 650 this is just a bearish retrace before we fall further. Perhaps we will make a solid double bottom and we can reverse back into bull mode.