The price of Bitcoin this week was stable, showing little change from last week’s price levels. Despite multiple attempts at breaching $600, this level proved resilient and forced price back down. News headlines however, were positive, with better news of adoption from the World Economic Forum and UK’s Gambling Commission.
This week has been part of a consolidation from August’s 2nd sell off to a 6 month low at $465. BitFinex’s hack left a scar on the market, and price has uncertain since. $600 was the highest peak on this retracement, but this level is a strong resistance. 2 attempts at $600 and $604 were not enough to breach, forcing the market to head lower for another bottom.
After failing to break past $604, price gradually declined to a $556 low. A deep V – shaped bottom on the 1 hour charts. This fractal resembles price the movement on the larger chart
“price slowly creeps up and then spike down.. then slowly recovers and creeps up then spike down. Price seems to be testing trend reversal versus continuation.”
On the 6 hour chart, this bottom is a second bounce of an ascending trendline. A second bottom to launch back to the upper rising slope. Price is likely to creep up the trendline and then break up to $620.
But the overall structure looks like a bear pennant, a corrective pattern. It is wise not to take positions for now. The market is still reeling off the BitFinex news and any moves up will likely be short lived.
This pitch fork from the 1 D chart on Huobi sums up the sensitive price level. It sits right above the lowest trendline, testing it for the second time. The last time price touched this line, was followed by a bullish break out of the triangle on May 22. We are hardly anywhere near the bullish sentiment that was prevalent at the time.
I expect price to creep up the trend line, attempt to break above the green trend line and fail. In fact this is the best case scenario, a target of $650. $620 is a reasonable target.
$600 is a significant level from as far back as November 2013 – July 2014. It will not be easy break below it, so massive support exists at this area. Similarly, breaking above it will require large enough buying pressure from bulls. There is intense uncertainty around this level. Market makers and traders can all see this.
Russia’s Tax Office Classifies Bitcoin as Foreign Currency
Over the past year, Russia has been ambivalent on whether to ban Bitcoin or let it thrive. The Ministry of Finance, the Court System and Legislators have differed on how to categorize bitcoin.
“Consequently, the transactions of purchase and sale of cryptocurrency (virtual currency) between residents and non-residents, with the utilization of currency valuables and (or) currency of the Russian Federation, are, in fact, currency transactions.”
Alexei Moiseev, deputy finance Minister said to a newspaper their office was working on crafting regulation to allow for buying Bitcoin and cryptocurrencies in foreign jurisdictions.
Bitfinex Shares out hack exchange losses
On Tuesday, August 2, Hong Kong Bitcoin exchange Bitfinex came under attack from hacker losing 120,000 Bitcoins in the process. This week, BitFinex came up with a plan to socialize losses. All Bitfinex users holding deposits at the time were subject to a 36% haircut as per BBC News.
A statement on BitFinex read
“Upon logging into the platform, customers will see that they have experienced a generalised loss percentage of 36.067%.”
In return, the exchange issued BFX tokens equal to their losses on Omni layer subject to terms. It is expected these tokens will be redeemable for repayment or shares in the exchanges parent company.
UK Gambling Commission Greenlights Virtual Currency use in Online Betting
The UKGC became the first significant gambling commission to allow use of virtual currencies such as Bitcoin. The change came in an update on its License Conditions and Codes of Practices that now sets out new rules on use of cash equivalents for online sports betting. Cash and cash equivalents include bankers, drafts, cheques and debit cards, as well as digital currencies. The new rules will take effect from October 31st 2016
The UKGC also emphasized
“Licensees, as part of their internal controls and financial accounting systems, must implement appropriate policies and procedures concerning the usage of cash and cash equivalents by customers, designed to minimize the risk of crimes such as money laundering”
Bitcoin Weekly Price Forecast
This week, I am neutral to bullish. The lowest drop this week would be a low $550, after which price should go up as per last week’s Elliott Wave forecast. A sideways flat trend does not invalidate this forecast and only delays the bounce expected from a local bottom.