Bitcoin Analysis: Mid-Week Update (Don’t Panic!)
The usual weekly series will still be out this weekend, but movements over the last few days warranted some attention.
The usual weekly series will still be out this weekend, but movements over the last few days warranted some attention. In last week’s post we were clearly bearish with an expectation that prices would drop to US$440-450 area and then if US$440 was not able to support the price it was clear sailing to US$360-380. As hindsight is always 20/20 the price paused for almost a day at $442 and looked like it might reverse as most wanted, but that was not in the cards. Today’s low was US$378 and even though it’s hard to say if the price drop has stopped, we are now short term optimistic.
The Bad: The news will be expended upon over the weekend, but in general, a few things are not issues right now in the space. The situation in the Isle of Man is displaying how much influence the Old Guard of Banking has Bitcoins price and confidence. New Bitcoin users are still few and far between while the number of merchants that accept BTC are on the rise.
The Good: The Good: There have not been any reports of exchanges or traders going rogue, or any major situations that may perceived as scams or issues with Blockchain’s infrastructure. The volume does not appear out of the ordinary and perhaps even a bit low to warrant this kind of drop in price. The price has already rebounded back over US$400 and it does not look like panic is spreading through the ecosystem. Blockchain.info does appear to be having some technical issues and appears stuck at block 321511. But again, it doesn't appear to be a reason to panic, the Blockchain itself is performing as expected as can be seen on blockexplorer. Cointelegraph has contacted blockchain.info about the issue and will report on their comments in a later article.
The Silver Lining: When prices drop or rise quickly without any major event, you can’t panic and should step back and think about consequences. Bitcoin is still in its early stages so if this has major impacts on your financial standing you probably have too much invested in terms of price dependence. It is also a good time to take advantage of companies and products that price things in Bitcoin. It’s like buying a product at a 50% discount vs. 6 months ago. As the opposite happened in December when Bitcoin was on par with an ounce of gold and many were taking advantage of the conversion.
The chart above is suggesting that the low of US$378 is a reasonable place for a bounce. Nothing goes straight down and we are inside the range we mentioned though at the very top of it. Some downside is definitely possible even down to the US$340 level, which would match the low back in April. However, the odds favor some stabilization and a rebound here at these levels. It’s very difficult to judge prices at point of high volatility but we are keeping an eye on the US$440 level for a reasonable rebound to re-evaluate and gauge the atmosphere.
The regular weekend update with more in depth analysis of past, present and future is still on schedule for this weekend’s release.
Reference Point: Friday Sep 19 1:00pm ET, Bitstamp Price US$403
Editor’s Note: As mentioned in the Silver Lining section above, Cointelegraph Media Group happens to be one of the companies that price their product in Bitcoin. The group, in addition to Cointelegraph.com includes CoinmarketCap, which is one of the top 3500 sites according to Alexa.com. With today's prices (relative to fiat) advertising with the Cointelegraph Media Group is much more affordable.
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About the author
Tone Vays is a 10 year veteran of Wall Street working for the likes of JP Morgan Chase and Bear Sterns within their Asset Management divisions. Trading experience includes Equities, Options, Futures and more recently Crypto-Currencies. He is a Bitcoin believer who frequently helps run the live exchange (Satoshi Square) at the NYC Bitcoin Center and more recently started speaking at Bitcoin Conferences world wide. He also runs his own personal blog called LibertyLifeTrail.
Disclaimer: Articles regarding the potential movement in crypto-currency prices are not to be treated as trading advice. Neither Cointelegraph nor the Author assumes responsibility for any trade losses as the final decision on trade execution lies with the reader. Always remember that only those in possession of the private keys are in control of the money.