Bitcoin Analysis: Week of Oct 4 (Quick Update)

The week of October 4th Bitcoin Analysis by Tone Vays.

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Bitcoin Analysis: Week of Oct 4 (Quick Update)

Note From the Author: This will be a shorter than usual report due to being a speaker at Inside Bitcoins Vegas Conference Oct 5-7 , where I will be conducting a 2 hr seminar showing the basics of chart analysis and perhaps some live trading. I will also be present at CoinAgenda/BitAngels event Oct 8-9 so readers of this series that see me in Vegas are encouraged to come by and ask questions.

Last Week’s Review

In last week’s post we concluded with the following statement:

Our overall stance remains Long-Term Bearish (with still limited downside), Intermediate-Term Bearish and now also Short-Term Bearish.  As much as this analyst hopes to be wrong, Bitcoin’s price is sitting at its most vulnerable point of the year. The highest probability move is the creation of new lows in the mid US$370’s and the most likely target for a potential stop to the slide in price is the US$340-350 area matching the lows of April. Falling below that zone we are looking at US$260-270 for the next high probability reversal.

More information was present in the conclusion, but because the primary case turned out ‘almost’ exactly as predicted, there is no need to re-print it here. So why the word almost - because we were expecting prices to fall into the US$340-350 zone and at the moment it looks like we might be reversing for a temporary bounce from US$353. During this past week we saw a small rebound back to the breakdown levels around US$400, which is a common occurrence in Technical Analysis as support becomes resistance.

Bistamp weekly October 4

The Long-Term view remains looking weak. Although it did not quite reach the US$340-350 zone, it came pretty close to it at US$353. The arrow is drawn pretty small because it feels like we need to come closer to US$340 in the near future before a healthy rebound, and in a situation where US$340 cannot hold the price up, a fall to April ’13 Bubble top at US$266 is certainly possible.

Education (Do You Know Where Your Private Keys Are)

No time for a detailed educational section today so I would like the take the opportunity to remind readers that Bitcoin can be the most secure asset in the world that cannot be stolen, confiscated or frozen by any means.  But that statement is only achieved with self-responsibility. Make sure you remember all your passwords or store them in multiple secure places. 

Double check your back-ups to your wallets and make sure you have at least one (encrypted) outside of your home. And, perhaps most importantly, only keep the amounts of bitcoins at 3rd parties that you are fully willing to lose. If someone else is holding your private key, technically the wealth is no longer yours. The say ‘possession is 9/10ths of the law,’ but since Bitcoin currently does not even have a law, it will be left up to the reader to infer what that means.

Fundamentals & News

This section will also be kept short today but as most of you have heard, the big news is of course out of Russia as it plans to put a deterrent on the use of Crypto-Currencies. Since Russia does not appear to be a major player in the Bitcoin Ecosystem like China, the US or Europe, the affects of this should not be critical, other than interest across the world on how this can realistically be enforced.

In general, criminalizing bitcoins should give it a boost in price and this fundamental concept will be further discussed in the weeks to come. In the mean time, just consider this: paying a US$1,260 fine still seems like a good deal for those looking to move a few Million to a place where no one can touch. As the trade war between Russia and the West starts tacking a bite out of both economies, smart investors will start to get more creative.

The Russian government will be on a hunt for cash just like the West so expect Taxes, Fines and Hidden Fees to go up across the world.

Daily Overview

Here is our 1-year Daily chart still referencing Fibonacci Retracements and a few Trend Lines broken back in July.

Bitstamp DailyOctober 4

This ‘intermediate’ term time frame remains Bearish, but since we are so close to the target of US$340-350, a reversal from here is certainly possible. The price would have to prove it to us, so until it does the higher probability is still to reach that target some time this month. There is also a lot of open air below US$340 so if it comes to that, it will be difficult for early adopters to stay as cool and collected as they have been all year.

Bitstamp Daily Short October 4

The short-term view is looking a bit oversold, so look for a possible rebound here to the US$400 area. Current low of US$553, of course, needs to hold but because our original target was the US$340-350 zone, don’t give up on this possibility until prices collapse below US$340.

Conclusion

Our overall stance remains Long-Term Bearish (with still limited downside), Intermediate-Term Bearish, but for the 3rd week in a row we are flipping Short-Term to now be Bullish. The previous 2 weeks worked out as planned so let’s see if this week is kind to the arrows on the charts. The overall picture still remains very weak for any meaningful reversal at this time. The highest probability move right now is a rebound back to the US$400 area. Even if the price breaks down this weekend into the US$340-350 zone, the fact that it’s oversold still allows for a move from US$340 back to US$400.

We will also remain diligent of the following situation listed in order of importance.

Bearish: In case prices break down bellow the US$340-350 zone, it would most likely go down to the US$260 area with the round number of US$300 perhaps slowing down the slide a bit.

Bullish: All talk of a potential bullish run will only begin upon a visible creation of a new High. At the moment this stands at US$405.  Only if the price reverses and breaks this area will we consider thinking about a potential change in trend.

Reference Point:  Sunday 3:45 am ET, Bitstamp Price US$358

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.

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