Bitcoin Price and QE Closure

October 29, 2014 17:38 UTC

The market has chosen the low road for the Bitcoin price. Leading into the Fed’s Policy Statement release at 18h00 UTC today, global markets are holding their breath: Will QE actually end this time and when will the Fed initiate the rates hikes that will cascade through global economies?

Fed Policy Statement
Global Economy
Bitcoin Price Analysis
Summary
Comments

Fed Policy Statement

Tyler Durden of ZeroHedge sums up the madness in a comprehensive one-liner:

…by now it has become all too clear that the Fed itself has absolutely no idea what it is doing and has bet (all in) not only the (taxpayer) farm but all of (crony) capitalism, that it can solve every problem just by printing free wealth for 1% of the population while at the same time impoverishing the rest, leading to precisely the record inequality… that the Fed itself rails against.

What do readers think? Please comment below.

Global Economy

Gold, like Bitcoin, is recoiling from its $1,250 advance zone and is currently trading at $1,223.

Gold Compared to Bitcoin (Bitcoin in yellow/orange)

Equities are rallying into the expectation of a Fed surprise. The S&P500 is currently back near its highs at 1,990.

S&P500 Compared to Gold and Bitcoin

Update 19h33 UTC – S&P500 Compared to Gold and Bitcoin

Gold seems to be the biggest loser following the Fed statement, so far:

The US Dollar index, that will be the main beneficiary of a the ending of QE (Dollar printing), is trading lower at 85.36.

US Dollar Index Compared to Bitcoin (yellow/orange)

Barring more smoke and mirrors from the Fed (or an outright surprise such as “QE Infinity”), the prior trends in the market should resume after the Fed statement today: Gold and Dollar up, equities down. It’s difficult to place Bitcoin in this mix of market dynamics… the correlation with Gold should see it go up, but inverse correlation to the US Dollar implies it goes down. Bitcoin analysis below.

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Bitcoin Price and QE

Time of analysis: 13h30 UTC

US Session

The Bitcoin price has fallen below Saturday’s $341 (Bitstamp) and looks set to choose a direction as markets adjust to the Fed’s policy statement today. Targets at $330 and $290 are back within paw’s reach for the bears.

Bitstamp Hourly Chart

Time of analysis: 18h06 UTC

Update: US Session

The Fed Policy statement confirms that the Federal Reserve will end the asset-purchase program that has added $1.66 trillion to its balance sheet and has stuck to its pledge to keep interest rates low for a “considerable time” – currently Time of analysis: 12h00

US Session

Bitstamp Chart

Summary

$330 and $290 are both targets with a strong potential for being the end of this wave 2 down. It’s prudent to wait for price to reverse strongly from either of these levels before buying on a higher low.

Buy conservatively at the .89 Fib retracement level (of the entire wave from 5 Oct – 14 Oct) at $290 (Bitstamp) with a tight stop-loss at $285. Should price bounce upward from this level and proceed back above $300 then look for price to hold above $300 on the daily chart before increasing your long position.

A drop below the 5 Oct low ($275 on Bitstamp) opens targets $260 and $205 to the downside.

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CCN hosts a summarized Economic Calendar showing the week’s main data releases.

Readers can follow Bitcoin price analysis updates each weekday on CCN. In-depth analysis articles are published every Sunday.

Disclaimer

The writer is fully invested in Bitcoin via BTC-e and Bitfinex. Trade and Investment is risky but not as risky as some other things out there. Take care only to take action in the market when you are 100% sure of the outcome. CCN accepts no liability whatsoever for losses incurred as a result of anything written in this Bitcoin price analysis report.

Bitcoin price charts from TradingView.
Images from Shutterstock.

Last modified: July 12, 2015 12:04 UTC

@venzen

Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect. He has found a solution to the PKI mechanism. Email me to discuss.