Stock prices

Regulatory environmentThe Bitcoin price is rallying. Confirmation of continuing advance keeps coming in, but there is no reason to believe that this is the Big One just quite yet. Price analysis looks at advance targets and considers the implications of Bitcoin ETF regulation for the prospects of advance.

Price Rally of the Regulated Bitcoin Price
Global Economy
Bitcoin Price Rally
Summary
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Price Rally of the Regulated Bitcoin Price

Now that the Bitcoin price has been successfully subjected to regulation in the US we need to consider the price chart in a different light.

The number of institutions now offering regulated Bitcoin investment vehicles and the amount of Wall Street money dedicated to this purpose has lifted Bitcoin out of the risky early adoption phase. Some market commentators argue that Bitcoin has been aggressively traded by Wall Street banks and hedge funds for well over a year.

The largest players, with the apparent assistance from the centralized exchanges, have effected a controlled decline of the Bitcoin price over the past ten months. Failure to make a lower low than 5 October’s $275 (Bitstamp) means that a more powerful wave to the upside has begun. Now that the largest players, who invest Other People’s Money (OPM), have an objective low and a price chart with a $1,000 all time high in the recent past, they can solicit the investment that the Bitcoin Foundation’s new-fangled and regulated Bitcoin price chart has been positioned for.

However, consider how the usual two-month wonder price rally is not all that good for big business. Imagine a swift rally, between now and New Year, to $1,500 followed by profit taking that brings the price back to $500. An obligatory correction lasting several months… and how do these large funds justify holding investors’ money? How do they justify their existence and running costs if they are only going to be taking profit once a year after a two-month rally?

One solution is to control the advance in the same way they had massaged the decline. However, this is expensive because Bitcoin wants to rally – they’d be burning a lot of money for the sake of appearances and favorable client reports.

The second option, which seems more achievable, is to let the market rally, but to halt the advance, intermittently, at obvious technical levels. Instead of letting price correct and resume the advance at these levels, it is conceivable that they switch on the bear bots to bring price all the way back down again. The client report reads: “Latest Bitcoin Rally Nets $x Million for BitGasm Fund Clients” and the enforced price lows serve as an incentive for new clients to commit their capital.

A third option is just to let the Bitcoin price rally run its course to $4,000 and above but then the risk becomes that greed and profit taking make the price chart volatile and scary to show to clients.

If you and your buddies spent years building a multi-million dollar business that depended on lobbying and campaigning of a non-profit (BF) as well as parastatals (SEC and CFTC) then – once achieved – what would you do? .

Besides, the BF seems to have presentience of something that’s coming:

What do readers think? Please comment below.

Global Economy

US Dollar

Since our last look at the Dollar Index (DXY) price has kept advancing. Chart technicals, especially reverse indicator divergence, forecast higher high are on the cards for the US Dollar.

DXY 10Nov2014

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Bitcoin Price Rally

Time of analysis: 04h00 UTC

Asian Session

Weekend trade bounced the Bitcoin price off the 4-hourly 20-period moving average, and, on Sunday, price climbed above the 200-period moving average.

BTC-e 4-Hourly Chart

BTCe bitcoin chart h4 10Nov2014

Holding above the 200MA on the 4-hour chart will be a sign of continuing advance while dropping below it will signal the end of the advancing trend. Before looking at price targets for the advance let’s quickly take a closer look at price action since the low ($318 BTC-e, $317 Bitstamp) made last week.

The following 15-minute BTC-e chart shows the characteristic wave patterns of a Bitcoin advancing wave.

BTC-e 15-Minute Chart

BTCe bitcoin chart m15 10Nov2014

Turning to the daily chart, we see that price is well above the daily 20MA. The 1.618 Fib extension of the wave up from 5 October is in proximity to the daily 200MA near $500.

BTC-e Daily Chart

BTCe bitcoin chart daily 10Nov2014

Advance should target the daily 200MA as its initial target. Another Fibonacci extension target waits at $600. Whether that gets hit on this leg of advance remains to be seen.

There is no objective evidence that this is a super rally and only advance beyond $590 and then $680 (the previous high) will support expectations of advance to $1,000 and beyond. For now, we can only assume that the target of advance is somewhere near $500 and that the current wave structure is a C wave of a corrective advance. The Bitcoin price advance may strike out to $500 or $600 only to return to below $400.

Summary

The Bitcoin price is rallying. The critical chart indicators are the 20-period moving average as well as the 200-period moving average – annotated in green and red, respectively, in the charts above.

Bitcoin price advance has, in the past, always remained above the 20MA on the daily chart – any dip below is a warning sign that the trend may reverse back down. However, whilst practicing caution, make allowance for price to approach the 20MA and bounce back to the upside. The historical chart shows that this phenomenon is common.

Getting above the red daily 200MA (two hundred MA) is a critical confirmation sign that a larger rally is unfolding. Until such confirmation is printed on the daily chart, we patiently view the daily 200MA as a target level.

On the 4-hour chart, the 20MA and 200MA have similar significance to what is described for the daily context. The 4-hour chart above shows that price has a tendency to return to the green 20MA after completing advancing sub-waves. This makes the 4-hour 20MA a convenient trigger for strengthening a long position with additional buying. Once price (on the 4-hour chart) has advanced above the 200MA (two hundred) then the 200MA becomes the first bellwether of trend reversal. Confirm such reversal on the daily chart. Until then, remain long to $490.

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Disclaimer

The writer is fully invested in Bitcoin. Trade and Investment is risky. 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.