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Tone Vays is a 10 year veteran of Wall Street, who was kind enough to provide our readers with a series of articles about technical analysis of Bitcoin price.
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.
The price of Bitcoin has always been the hot topic of conversation, and as much as Blockchain enthusiast try to explain the fact that the function of being the ‘medium of exchange’ is just the first application, this hot topic is not going away any time soon.
Before we attempt to technically analyze the price charts we need to keep in mind that just like any other market, its future price is still primarily driven by fundamentals. However, unlike the Stock Market, the fundamentals in the Bitcoin world are news events, which as most followers know are becoming more and more difficult to keep up with. Here is a chart of some of the highlights in the Bitcoin Ecosystem since 2012:
There were many other events that had significant influence on the price, but there is just so much room on the chart. It is also not always clear if an event will be seen as positive or negative. For example, most people expected the price to continue to drop after the Silk Road Closure, with people saying that that it was the only thing Bitcoin was good for, but instead, that day set the final low under US$100 never to be seen again.
Similar expectations took place in November 2013 when the US Senate held hearing on Crypto Currencies as the majority of people watching realized that the US Government might just be open to learning more about this technology before making any rash decisions. On the other hand, the increase in adoption by bigger and bigger companies, from Overstock to Tiger Direct to Dish Network to Expedia along with numerous Venture Capital investments have not been able to drive the price to new highs.
This is where Technical Analysis plays an important role because not all moves can be contributed to the fast moving news cycle. Two notable examples of this are the 80% correction back in April 2013 and the sudden trend reversal in May 2014 that has already added almost 50% to the price of a single Bitcoin. Here is another chart of the long-term weekly view of the price but this time we take the technical approach:
Since not everyone is familiar with Technical Analysis, this series of posts will attempt to educate as well as provide some guidance to those looking to trade Bitcoins. The chart above focuses on Fibonacci Retracements and the break of the 6 Month Downward Trendline mentioned earlier.
The trend reversal appears to be very significant on a long-term basis while the Fibonacci’s are implying that the 50% retracement is being very resilient at this moment at US$628. You will also see labeled on the chart a very similar Fibonacci situation took place back in October. Once the 50% line was broken it only took a week to get to the next level, which in today’s case would be around US$750. That is looking like the likely scenario over the next few weeks.
There is also the possibility of a rejection at these levels sending the price back to the 61.8 level of US$500, but technically this is a less likely scenario and would only be considered once the price drops below US$600. As long as it can stay above US$500, the new upwards trend will remain strong.
The NY regulation rules that were just announced may have an affect here. Even though it seems like NY State decided to tighten the screws as much as possible, this might be something positive if you are a Wall Street banking institution with money, compliance and experience in the speculation game.
We will have more explanation of what these Technical Tools represent and how they are used along with other topics like:
And we will also cover many other topics with the ultimate goal of analyzing the significance on the price, because after all, that’s what everyone wants to talk about.
Next week we’ll start to dive in deeper with daily charts. Always remember that for the first time in a long time, you are given the power to be your own bank. The final decision of what you do with your Bitcoins is yours and you should only trade with the amounts you are willing to lose. This is a new and difficult to time market even without the lingering memories of Mt. Gox haunting us all.
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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