This week, the build up to the Coin ETF decision by the Securities and Exchange Commission, climaxed after the application was rejected. Volatility resumed just in time for a massive spike to $1350 that was quickly followed by a sharp sell off to $975 – all in under 5 minutes on Friday afternoon. The ETF decision drew mixed feelings – some of the opinion Bitcoin is still nascent, others in the screw-the-SEC camp. Price has now stabilized halfway through the peak to peak flash spike, perhaps an expression of the overall market sentiment. The bitter hard fork debate from late 2015 has resurfaced, as threat of a hardfork by Antpool and Via BTC intensified. Where do we go from here?
Since the last price analysis, Bitcoin broke past the all time high of 2013, before consolidating sideways above $1163. After breaking past significant levels, a retest of support was in order. Price held above $1163 before rallying up some more past $1198, all the way up to an impressive $1298.
On March 3, a new historical high caused a stir. For the first time in history, Bitcoin had crossed past the spot price of gold. XBTUSD bitcoin traded at $1238slightly above the $1236 price of XAU gold. 1 Bitcoin was now the same price as a troy ounce of gold! The chart above is bitcoin breaking past gold’s flat lined price. It has traded above gold for the most part of 2 weeks, but there has been retests of XAU as price support in the chart below.
The excitement did not last, attention quickly shifted to the much anticipated COIN ETF. Traders pondered lofty projections of $1300, even $1400, in the event of a positive decision on the Bitcoin Exchange Trust by the Securities Exchange commission, expected on Friday 10th between 4pm and 6pm New York time.
But all was not well.
Ant pool, the world’s largest mining pool, mined 6 Bitcoin Unlimited (BU) blocks of an alternative bitcoin hard fork chain as a signal of support. The partially mined block made AntPool the eighth pool to mine Bitcoin Unlimited blocks. BitMain CEO Jihan Wu’s, a long term supporter, of an alternative to Segwit and Bitcoin core, followed up with comments on twitter. Both events set off a drop from $1278 to $1176 on Bitstamp . The decline escalated into an a – b – corrective wave, marking $1298 as the final wave 5 top on the 12H – a retracement I have expected over the past 3 weeks.
Since January, I have closely tracked a classic 5 wave elliott wave pattern unravel on the 3D and 1W charts as well as on lower timeframes on the 12H and 6H. The rules and guidelines of EW are clear, 5 impulsive waves in either direction are followed by a 3 wave a-b-c correction down in the opposite direction.
The 2 charts below illustrate the 5 wave fractal on the 12 hour chart and the one on the 3 day chart.
As the ETF decision drew near, Coindesk reported
“Many market analysts asserted that traders had already priced in the ETF’s chance of receiving approval, a development that coincided with bitcoin’s price repeatedly nearing $1,300 in recent sessions. After reaching these lofty levels, some warned that prices could potentially suffer a pullback if the agency opts to reject this proposed fund.”
But Bitcoin proved everyone wrong. Hours before the decision, an abnormal spike quickly rallied to break past $1300, up to $1350, before, sharply selling off in the opposite direction to a low $975 on Bitstamp. Within the span of 2 minutes, Bitcoin had squeezed shorts betting on a post ETF drop and longs expecting lofty highs post ETF. This chart above highlights price action
The ETF decision finally came, later on March 10. The board rejected the COIN ETF in a lengthy document leading price to fall to $975 low on Bitstamp.
“The Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”
Since then, the price of Bitcoin post ETF announcement has been a mixed back of consolidation between $1050 and the peak high at $1298. At at writing this, Bitcoin is trading at $1250 after a gradual recovery from low $1000s, where support held after a disappointing ETF ruling.
Bitcoin Weekly Forecast
This week and for the foreseeable future, I am bearish. I am looking at price retesting the $700 to $800 level at some point. The current price levels are not sustainable based on the ETF ruling and the divisive hard fork debate that is back on the headlines.
I expect an a-b-c corrective wave structure on the 3D chart, where the market has clearly formed a 5 wave impulsive structure since October 2016. The minimum target is $800, where fractal wave 4 held as support.
Meanwhile, expert traders, like Vinny Lingham, have reassessed their projections for 2017 in light of a renewed interest in larger block sizes by hard fork consensus. Vinny tweeted
“Danger on the horizon. If Bitcoin forks, all bets are off and we can kiss $3k BTC in 2017 goodbye.”
For now, it is best to stay out of the market and watch from the sidelines.