Bitcoin Value Is Indestructible Regardless of Price

While reading the interesting response by CCN journalist, Evander Smart, to a recent vote-of-no-confidence in Bitcoin value, it struck me…

While reading the interesting response by CCN journalist, Evander Smart, to a recent vote-of-no-confidence in Bitcoin value, it struck me that so many know so little about the block chain innovation. Price chart analysis and a brief value analysis are presented in today's article.

This analysis is provided by xbt.social with a 3 hour delay. Read the full analysis here.

Bitcoin Value and Price Analysis


Time of analysis: 15h29 UTC

Bitstamp 4-Hour Chart

In the transition phase between trend cycles, the Bitcoin speculative market is completing a third terrace of consolidation. In mid-January, the market spent a week consolidating around $209 and 1290 CNY before rallying to just over $300 / 1900 CNY. A second phase consolidated around $222 and 1380 CNY before climbing a Fibonacci ladder to $260 / 1660 CNY. The current phase of sideways price action has seen a greater range of price movement as two gradual advances above $242 / 1500 CNY were followed by sharp profit-taking sell-offs - the market nervously anticipating its next move.

As the 4-hour Bitstamp chart, above, shows trade has re-established price above the rising red 200MA and price action is heading toward a descending trendline drawn from the November 2013 all-time high. The trendline can be likened to a watershed since price action has not ever advanced above it. At the current sideways trajectory price should encounter the long-term trendline by 5 March.

Speculation and Trade

Bitcoin's value as a speculative instrument has a direct bearing on its market price. There are many who, sour-grape-like, rejoice in its decline - the "bursting of the bubble" and the eventual demise of the "e-money" responsible for the greatest commodity rally in history. What these cynical side-liners need to take into account is that the movements in the Bitcoin chart are primarily the result of speculative trade.

The availability of leveraged Short Selling contracts (via exchanges and brokers) means that margin-based traders make equal profits whether the Bitcoin price is going up or going down. The year-long decline is therefore not a Titanic-esque loss on investment for most, but the coming of age of the derivatives component of this fledgling market instrument.

After the April 2013 top, Bitcoin's critics eagerly used the phrase "Tulip Mania" and whined "It has no inherent value!". Self-education is the only way to see what Bitcoin - the block chain - is all about. The notion of Trustless transactions might not be easy to grasp but that the block chain is decentralized and that its flagship, Bitcoin, is, therefore, censorship-resistant is perhaps too much tech jargon for most people's ears. However, with a bit of focused reading and information gathering via Yoda's Brain Connector it is possible to understand the significance of the block chain innovation.

Fundamental Valuation

Once understood, it soon becomes apparent that no other asset, whether a stock, a currency or commodity, has or ever had, the "fundamentals" inherent in Bitcoin. The Decentralization principle, the melting away of the need for trusted third-parties, the inability of any government, central bank or even the entire military-industrial complex to censor it - this is the disruptive value. Yes, Bitcoin is a digital currency, but the block chain can store and account for more than just 21mil bitcoins - documents, contracts, mathematically accurate and provable public consensus (such as votes), multinets (as opposed to The Internet) - everything can be block chained. The fact that Bitcoin use is increasing, as evidenced by more adopters and block chain transactions, means that people find Bitcoin's features and public ledger useful, and that is what gives it its value.

Summary

Bitcoin value is underestimated by most, the Bitcoin price at an intra-year low between market tops. The coming phase of advance could unfold gradually or run-up to last year's corrective highs in an exuberant rally. At xbt.social we trade the chart one price wave at a time. Earlier this month xbt.social issued a Long-Term Buy trade recommendation for investors, based on a buy signal in the daily chart. However, for intraday traders, there are weekly recommendations for low-risk entry into trades with high probability of success.

The Bitfinex depth chart shows the Bears are lying low. Beware - they're just resting.

Click here for the CCN interactive price chart.

What do readers think? Please comment below.

This analysis is provided by xbt.social with a 3 hour delay. Read the full analysis here.

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Readers can follow Bitcoin price analysis updates every day on CCN.

Disclaimer

The writer trades Bitcoin. Trade and Investment is risky. CCN accepts no liability 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 (UTC): July 12, 2015 12:40 PM

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Venzen Khaosan @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.

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