In short: short speculative positions, target at $153,
stop-loss at $515.
Bitcoin is still relatively hard for customers to use and it might be the
Blockchain solutions that will become more relevant in the future, we read in an article on the Fortune website:
Remember the hype over bitcoin? The crypto-currency that so tantalized
techies and excited investors is today in a sorry state: Its core supporters
are at war with each other and ordinary consumers still don’t care about this
supposedly revolutionary form of money.
But that’s only half of the story. The other half is about the remarkable
rise of blockchain, the core technology underlying bitcoin that is enjoying
unprecedented adoption by banks and big business.
(...)
“(…) mining is a really elegant software solution that equally distributes
who is going to validate the next set of bitcoin transactions,” Garzik
[former Bitcoin developer] says. “A private chain replaces the entire
trust-less aspect with a more private closed network of participants.”
In practice, this will involve the banks rejecting a global federation of
miners in favor of a handful of trusted verification partners within their
own network—a process already underway. For instance, a group of 15 banks
might agree that the ledger becomes official once computers from seven group
members agree to record a set of transactions.
We wouldn’t necessarily call it quits on Bitcoin. The currency still has
the potential to become a viable money transfer option, an area which doesn’t
seem to be affected that much by private ledgers. The point here is not to be
too bearish on the currency but rather see the current situation for what it
is. Bitcoin is definitely still having trouble with convincing customers.
This is mainly because it is relatively hard to set up a wallet, transfer
funds to it, get to know the apps and figure out how the network actually
works. The recent block size problems and the general perception of Bitcoin
not being particularly stable certainly don’t help.
The second part of the quote might actually show how ledger-based
solutions might actually look. So, for the confirmation of transactions or
ownership, financial institutions might actually set up their own networks,
akin to bank or exchange associations the members of which would participate
in the transaction confirmation process. This seems a far cry from the idea
of a currency free from the influence of the banks. On the other hand, such a
framework might not offer rapid international payments. So, there might still
be room for a global network.
For now, let’s focus on the charts.
On BitStamp, we saw Bitcoin go down from Wednesday to Saturday. This has
been followed by some appreciation. Which of these two periods provides us
with more meaningful hints?
In our opinion, the depreciation is more important. For starters, it was
on higher volume than the recent upswings. The size of the daily returns for
the moves down was also more significant than during the up days. Recall our
recent comments:
Bitcoin remains flat above $400 and the fact that the currency has held
this level is the main condition that might be cited as bullish. On the other
hand, the currency hasn’t moved up recently, it almost went to overbought
territory on Feb. 21 (RSI at 69.45) and now we’re seeing a pullback from the
possible overbought level. Almost all such pullbacks in the past didn’t end
before the oversold territory was reached (the major exception being the
November 2015 top).
(...)
The previous possible breakout above a declining long-term resistance line
is now weakened as the recent price action permits a redraw the declining
resistance line and there is now no breakout above it. What bullish
implications we had last time, have been diluted since and the situation is
still very much bearish.
We are now even further from the possible declining trend line. On top of
that, the RSI is still relatively far from oversold levels. It seems that we
might still see a continuation of the decline.
On the long-term
BTC-e chart, we now clearly see a pullback to the $400 level (green line in
the chart). Recall our previous alert:
For the time being, it seems that we still have important resistance lines
$450-470, so the situation doesn’t really seem bullish. (…) Combining this
with the bearish indications still results in a bearish indication,
particularly given the recent rally. It seems that Bitcoin might be ready for
more declines (in our opinion).
Even if we were to see the recent months as a head-and-shoulders formation
(which itself might be debatable), it would seem that we are now after the
second shoulder. This would itself be a bearish indication for the next
couple of weeks.
Right now it seems that Bitcoin has a lot of downside potential ($350
being the first possible pause for a potential decline) while at the same
time not displaying much upside potential. If we see a slip below $400, the
decline might accelerate.
Summing up, in our opinion speculative short positions
might be the way to go now.
Trading position (short-term, our opinion): short
speculative positions, target at $153, stop-loss at $515.
Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
Bitcoin
Trading Alerts
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