Bitcoin Price Analysis 27th August

Posted by: pesa_mic

August 27, 2015

After last week’s flash crash on Bitfinex, that dragged the market down to low 200s – $220 on most exchanges vs $162 on BFX, the market retraced up this week to a max high of $236. That was about it in terms of buying interest as the prices traded within a sideways 10 dollar range – upper ceiling of $236 and lower bound of $226. It had the makings of a consolidation before continuation; this was confirmed on Monday when prices sunk lower to a 5 month low of $198 (Bitstamp), unfolding fast within a 24 hour time span.

Since the market confirmed a bear return (short term), trending prices have been below EMAs and MAs in higher timeframes (4h, 6h, 12h, 3d, 1w). The Greece run up in June from lows of $213 to July’s top at $316 was an impressive attempt at breaking above moving averages on the higher timeframes. A change in trend is should be observable on both lower and higher timeframes. The double top failure ($316 and $298), edged close to breaking above 200, 50 and 30 day EMA and 30 and 50 day MA on the 1 week chart. Arguably, there was seemingly real intent to end the 20 month bear. Now, a different picture and for technical analysis, observing lower timeframe moving averages makes sense.

2 hour charts offer a visual of the plummet to $196 and a deep V- channel retrace back up to try get back above EMAs. So far, it has successfully breached 50 and 30 and is now attempting 100. A period of consolidation here, similar to before, is natural before an attempt to $240. 100 EMA on the 4h charts cuts across at $241, a reasonable target for this move up.

Zooming out, there is a larger trading range since January’s capitulation, bouncing off the lower limit and back to the top. Question now is whether we are in for a sideways trend and back to the upper bound, or sideways and a fall out of the trending range.

“By all appearances, the $150-320 move over the past 7 months or so is a clear 3-swing correction.”

Read on for price forecasts.

Bitcoin Fundamentals

BTC China says will Apply for NY DFS BitLicense

BTC China this week announced it was in the process of applying for the BitLicense with New York Department of Financial Services. The regulation, has been on the receiving end of criticism from start ups in this space and the community at large, even putting off exchanges such as Kraken and BitFinex from serving customers from the Island. Making the announcement via a twitter stream, BTC China said of itself

“We are the 1st bitcoin company in Asia to apply for the BitLicense”

Outage at BitFinex Fuels Suspicion over its Operations

After last week’s BitFinex flash crash disaster, analysed on BitFinex Flash Crash – Post Mortem Analysis, prices slumped again on Monday, this time due to BFX closing its order book and claiming trouble with their post-trade processing, Coindesk reported. Trading was disabled from 5.27 UTC to 12.31 UTC when trading resumed. As per BitFinex spokesperson, Zane Tackett,

“we encountered an issue with post-trade processing, upon which we decided to halt trading to ensure consistency in the order book.”

On a whale club audio recording last week, Phil Potter, CSO, attributed some of their technical glitches to transitional software by AlphaPoint. The exchange’s reputation is on the line as users’ vocal impression cast doubt over its credibility.

Bitcoin Block size debate takes a turn

The past weeks of back and forth exchanges over Bitcoin-XT blocksize hardfork proposal by core developers Mike Hearn and Gavin Andresen, took a turn with a new alternative thrown into the ring of options by core developer Jeff Garzik. BIP-100, comes off as a middle ground option with 90% vs the usual 51% majority consensus threshold for increasing the block size. Judging from its reception by the bitcoin community, and headlines such as “Support Grows for BIP 100 Bitcoin Block Size Proposal” it seems a more reasonable approach likely to get backing vs Bitcoin-XT BIP 101.

Bitcoin Weekly Price Forecast

If indeed the market has been in a correction state since January, then by that measure, we are still in a bear trend. I had put off my calls for lower prices in June after the Greece run up, but, at the back of my mind, I ruminate over this correction as a real possibility. I will elaborate this in a future post dedicated to a long term view and the real possibility of $100 prices (or not). For now, a look at what to expect in the short term.

This week I am bullish to sideways. From the $316 top, we are in a sloping trend that has held well so far. After looking at EMA’s, $240 looks a reasonable target for a top. I expect prices to continue going up on this move and possibly pushed down at the $240 level back to range within the rectangle. Because of time estimates, this week might see both up and a return to within the rectangular trend. Huge moves such as Mondays take time to consolidate, thus, a sideways trend similar to 2 other indicate seems likely.

Updated: 2015-08-27