Category Archives: Bitcoin

Bitcoin Summer Analysis

An analysis of the Bitcoin market post MtGox!

Dramatic declines in Bitcoin price towards the end of December left some pundits calling a bubble in Bitcoin. However a few weeks later in early January, after reviewing the situation it was clear that the bubble did not pop.

Bubbles tend to occur when non-professional investors attempt to trade on gossip causing a dramatic price increase that attracts more greedy investors to join later to catch some of the action. Once the high is reached everyone sells off to try and take profit and prices return to their original levels. A money market like Bitcoin was a poor candidate for a price bubble and as I explained, the price range established mid November offered support to what appeared to be a crash.

The failure of MtGox did not shake the other exchanges and although prices continued to decline in a down-trend on lowering volumes, prior lows probed more deeply but held and then the down-trend broke after consolidation mid May followed by recovery.

Summer brings a return of confidence in the market with consolidation around $450 in May and $550 to $670 area in June-July.

Overall a bullish outlook but still with concern from the lower low swing down to $350 in April. Opportunities to trade short if $550 breaks to test below $350 or if $670 area breaks, then up to $850 and perhaps probe the highs again at around $1150.

The above information and the associated program are purely intended for educational purposes, they are not intended as advice or a solicitation to trade.

Interested in more regular Bitcoin updates? Then please let me know.

Errata: At 8:08 I describe the bottom at $670 instead of $570 (dark blue line in B region).


The Bitcoin Bubble?

I’ve been interested in Bitcoin since the early days but have not been paying much attention to the price action until recently. This is a postmortem of the idea that Bitcoin was in a “bubble” at the end of 2013. Neither the fundamental or technical analysis supported this idea.

Bitcoin in an exotic virtual commodity with associated technology. It has an established market base and a potential to become an international digital currency with wider applications. It is a high risk investment for skilled investors.

Technical Analysis:
Pundits* have recently suggested a bubble, however earlier and recent price action seem to confirm that this is not the case. (see program for explanation)

*Forbes, Bitcoin May Be Following This Classic Bubble Stages Chart, Jesse Colombo
Jesse wrote the above article just after the probe and rejection of the A price range low, at about B on my chart. As you can see the market was easily able to break $700, such was the power of buying at below $500.

The Bitcoin market should continue the move to test the prior high in the next couple of weeks. Current behaviour suggest that the rally may fail near the prior high and fall back to retest the centre of the $500-$1200 range at around $850.

The above information and the associated program are purely intended for educational purposes, they are not intended as advice or a solicitation to trade.

The Corruption of Money (Part 1): bartering to early banking

In this first of 2 programs on money and banking I explore the economic challenges of prehistoric societies and how the development of agriculture, markets, currencies and early banking promoted wealth creation. I also highlight the challenges and risks of the ancient banking practices.

This program is foundational to understanding the social and economic importance of money.

In part 2 I explore modern banking, fractional reserve banking, fiat currencies and cryptographic commodities such as bitcoin.