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).


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