Note from the Author: This will be my Final Analysis article at CoinTelegraph. It was a pleasure writing for this organization but it is time move on to do some more in depth research. Please follow me on Twitter (@Tone_LLT) for continued updates and I will become more active along with providing my future affiliations in the space on my blog LibertyLifeTrail.
Last Article’s Review
2 Weeks Ago we concluded with the following:
We remain stubbornly bullish and will continue to do so until all our support points break down. The volume for the Chinese exchanges has been down in light of the holidays so there might be one more week of back and forth. Those that have no positions at the moment might want to do nothing and just wait for a close above the 50-Day SMA plus a higher high the following day. That would provide some real signs that there is enough momentum to take us back to US$300.
Two additional scenarios in order of higher probabilities
Bearish: The bearish case is actually pretty compelling at the moment. Using daily charts we have very limited support around US$220, $210 and $200, which in the bitcoin world could all be broken in a single night. Once under US$200 the situation becomes scary with open air till the resent low of US$166 and if that goes, then we can see US$100 in a hurry.
Bullish: There really is not much of a bullish case beyond the primary view. Once we are safely above the 50-Day SMA, there is not much stopping it till the200-Day SMA currently around US$350.
Everything happened just as expected. Staying bullish for weeks hopping for higher prices eventually lead to several breakouts reaching a high of US$294 on Bitfinex. Our targets for the breakout were US$255, $285, $300 and $330. We came just shy of the 3rd target so the question we will look to answer is whether this is it for the time being or does momentum carry us over the US$300 mark?
For now we start as usual by looking at the big weekly picture.
As you can see, the weekly chart is slowly moving up to meet the bottom of the long-term trend line. This is a good sign but the fact that it is doing so extremely slowly might not bode well for when it does finally hit it. We remain bullish at this time horizon but there is nothing here indicating a major breakout any time soon.
Fundamentals & News
Not going to focus much on individual news today and will just talk about the Bitcoin community in general and the Anarchapulco event put together by Jeff Berwick of Dollar Vigilante and host of Anarcast.
The event in Acapulco Mexico brought together an interesting crowd. It drew over 200 people and while everyone was familiar with bitcoins there was a fair number that have never had a wallet so it was great to have Roger Ver there not disappointing his stature of Bitcoin Jesus by handing out a few dollars in bitcoins to anyone who installs their first wallet. As a last minute speaking addition, Peter Todd was there to explain some of the intricacies of what is happening behind the scenes with this technology.
The majority of the conference was of course focused on freedom and liberty and while there was a lot of good speakers. Three presentations in particular really stood out in my opinion so I would definitely recommend keeping an eye these people in the years to come if you don’t know them already.
Also here is Ernie Hancock’s overview of the event on his how Freedom’s Phoenix.
Many of the presentation were recorded including both of mine so hopefully videos will begin to hit the web soon. All and all, this was an excellent and fun event and will be looking forward to attending part two if it’s in the works.
As for the general state of the Bitcoin ecosystem, I would have to say things are struggling a bit at the moment. There is still a lot of skepticism looking at the system from the outside. Almost every week another scam in the space is exposed and even thought it should be looked at as a good thing, most people and especially the media will never see it as such.
There are plenty of incentives at the moment for merchants to accept bitcoins especially when they immediately convert to local currency, but the advantages for the consumer have not yet been realized by the general public. In fact it feels like there is a massive campaign to talk Bitcoin down based on the fact that there is no one to call to reverse a transaction. This is a very dangerous way to see things and is probably the leading cause of driving users to what I consider the most dangerous company in the space “Coinbase.” Also in light of the price going down, it is hard to make an argument that bitcoin is a good store of value, which is another reason for the slow consumer adoption after hype and speculation drove prices to what is in hindsight unrealistic levels.
The reality is that Bitcoin has the potential to change the entire global landscape. In the end game, superpowers rise and fall based on economics and global confidence of the people. The endless growth of Government tacking on debts that will never be re-paid will be coming to end within our lifetimes and the system will have a complete reset. Those that see the Blockchain as a cool new payment system looking to integrate with institutions that should have been wiped out in 2008 or even 1998 when the collapse of Long Term Capital Management needed a massive bailout, just don’t see the big picture.
Everyone always calls the Bitcoin purists that don’t want Government approval or recognition as naïve when, in fact, it’s the other way around. Those that are at the footsteps of Government buildings begging for permission will end up on the wrong side of history. And all those developers that do not believe in open source code and imbedded privacy are not doing what is needed to advance society, you are not doing the Blockchain world any favors when you spy on the users and anything other than taking a technological stand against the NSA is not technological progress in my book.
“The Bitcoin community needs to keep an eye on the rearview mirror because while everyone is bickering over what Bitcoin should be, the Darkcoin team is actually innovating and stability along with confidence in their Blockchain is slowly growing.”
Here is the usual one-year look back using daily candles.
The Daily chart continues to flirt with the upward sloping channel. The quick burst past US$300 and new yearly highs never came, but there is still descent hope we will get there. The possibility of hitting the top of the channel is starting to get dim so at the moment we are hopping to hit that US$330-350 range and see what happens next. Most likely we will then turn and test some lows, perhaps in the low $200’s or even the low US$100’s. As stated before, it is all about confidence and if people continue to hand over their bitcoins to unproven 3rd parties and fund these fraudulent companies in the space the negative headlines will keep on coming.
The zoomed in Daily version of the same chart is looking the most optimistic of them all. Notice how we finally closed above the 50-day SMA and have stabilized there for a week. This is a great sign. The ideal situation would have been to pull back to the US$255 area and test this moving average from above, but nothing in life will ever be perfect. The probability is high that we will move up and hit that 200-day SMA currently at US$338 but still falling. Just be aware that dropping down to US$255 from these levels does not alter this view.
The Hourly chart that is usually profiled on Twitter (@Tone_LLT) continues to be a struggle. After giving multiple indications that it’s headed for that pullback to US$255 it has remained above US$270. This is slowly strengthening the short-term bullish case, but is not providing any good entries for intermediate term investors and traders. Because the 200 period SMA is moving up we would now be happy with a good bullish entry in the mid US$260’s for a chance to see ride this wave back above US$300. Perfect entries of course are rare so it’s always up to the reader and their risk tolerance as to when to enter or exit any market.
We remain bullish for the time being with an eye on our final two targets of US$300 and US$330. It always depends on how it gets there but most likely these would be good target to take some Bitcoin profits and watch the global economy unfold. There will be more merchants coming on line but the value proposition for the consumer to use bitcoins over a credit card is not yet made. This will continue to be a burden on bitcoin’s price for the time being.
Two additional scenarios in order of higher probabilities
Bearish: The bearish alternative begins to show its signs if the price falls under US$250-255 zone. It gets some teeth under US$223 and if we fall under US$200, it will be a very depressing spring as we wait for the EU fireworks of Greece defaulting mid summer.
Bullish: The primary case is already pretty bullish, but in order to start thinking about the moon, the price needs take on the 200-day SMA the same way it just did the 50-day SMA last week. Moving above the 200-day SMA, then coming back to test it in that US$330 opens the door for moves to US$400 and US$440, but without a full blown sovereign debt crisis and bond defaults, the odds of reaching these marks at the moment are pretty small.
Reference Point: Monday Mar 8 2:00 pm ET, Bitfinex Price US$275
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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