Bitcoin Price Analysis 1.8.16

This week, the price of bitcoin sold off in a series of steps from a $684 peak on July 18 down to a series of lower lows. Price traded sideways for much of the week before July 30ths $657 high was tipped. A massive  sell off followed on July 31 and August 1st, bringing down price to a shocking $614 low. Speculation points at the impact of a secret meeting in Hong Kong between 20 Bitcoin Core developers and Chinese Miners.

Bitcoin Core and Chinese MIners Secret Meeting Sparks Sells Off

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What outcomes do we expect from the FOMC core dev meeting with miners right now?Does anyone expect some new information to impact the market in the next few days?”

The timing of the sell off is not surprising at all. Bitcoin’s price has always been vulnerable to these kind of event triggered sell offs. Most recently, Mike Hearn’s rage quit back in February that led to a 15% sell off.

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After May and July’s meteoric rise to $780, this move lower has caught traders expecting a mega bull run to $1200 off guard. Market sentiment has been biased on a continuation of the bull rend. The sideways consolidation from June 20 and much of this week was supposed to precede a break upwards. But, markets are irrational.

“I think the downward price pressure you are seeing right now is people’s pessimism that there will be a break from the current status quo.”

There is no doubt blocksize debate and talks of a Hard Folk will come up again as an overarching fundamental risk going forward

BITCOIN FUNDAMENTALS

Bitcoin Hard Fork Expected in 18 months

Bitcoin expert Andreas Antonopoulos hosted an AMA for the Chinese community organized by Cnledger. The full transcript is worth a read for perspective on Bitcoin development – which matters for price fundamentals. In light of Ethereum’s recent hard fork mess, questions on a timeline for an expected Bitcoin Hard fork were raised. Andreas was diplomatic, saying

“the current plan is good:  to do segwit first, improve the relay network, implement compact blocks and other small changes followed by a carefully planned HF to 2MB in the next 18 months.”

Expect an impact on price when it happens. ETH and ETC alternative ethereum fork chains is a glimpse of the kind of risk at play. This is a fundamental risk on price in the medium term.

Reserve Bank of Zimbabwe Issues Warning on Bitcoin

An official from the RBZ admitted the Bank had no regulation in place for cryptocurrencies such as Bitcoin. Josephat Mutepfa, Director of National Payments warned of the associated risks at a Mobile Money and Payments conference held in Harare, on 28 July.

According to TechZim, the grey area has not fazed 2 early Bitcoin startups based in the country: BitMari and BitFinance. Tawanda, a founder at BitFinance said

the good thing is that there’s no prohibition and there’s going to be no regulation for a while. As a startup, that’s good news for us – a space that’s unregulated, unprohibited and won’t be regulated for a while is the entrepreneur’s sweet spot.”

Zimbabwe, recently underwent an interesting fiat currency hard fork. Paper cash dollars trade at a premium and exchange rate versus equivalent electronic dollars. More on this on Bloomberg.

Miami Court Judge rules Bitcoin is Not Money

According to Bitcoin Magazine, Michell Espinoza, the defendant, appeared before Judge Teresa Pooler, on money laundering charges for selling bitcoins to undercover law enforcement officers. Pooler dismissed the charges, pointing to current state regulations as vague on the definition for virtual currencies. She likened bitcoin to property, saying the defendant was free to sell property to another.

“At this time…attempting to fit the sale of Bitcoin into a statutory scheme regulating money services businesses is like fitting a square peg in a round hole.”

The case is the first to prosecution to define the legality of Bitcoin in the United States.

Bitcoin Weekly Price Forecast

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The next level on the way down for a retest is the likely target as the market trends lower. $590 – $560 level, last tested on late June and early June is a strong level to find support. The market will consolidate above the most recent low, $614 for a while and pull in some more traders into long positions. But, the trend in the near short term is down. There does not seem to be much interest in pushing prices higher for now.

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In fact, the past month of a decline and sideways are the hangover effect of the exponential rise before the halving. A larger consolidation of this bull swing is taking place. I am open to a price heading down to as low as $480 in the coming months.

The halving seems to have catalysed a pre-halving bubble.

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