Daily Archives: March 27, 2017

Forbes

Bitcoin Price Rises Higher Than Gold... But Its Value Is A Different Story Forbes Since hitting a record-low of $177 in January 2015, Bitcoin is up almost 600%. On March 2, 2017, it reached a new high of $1,268 per unitthus surpassing the price of an ounce of gold for the first time ever. So, what's the driving force behind this ...

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Bitcoin Price Rises Higher Than Gold... But Its Value Is A Different Story - Forbes

Bitcoin has been trading between $1114-887 this week, according to the BLX, in extremely volatile market conditions with intense bearish momentum. The Network Hashrate gained 3.24% on March 3rd, and has increased 42.48% year to date.

The most important fundamental news this week has been the back and forth exchange between the Bitcoin Unlimited (BU) and Bitcoin Core (BC) factions. BU miner signalling continues to gain ground, up 10% this week. Nodes however, remain heavily in BCs favor.

Meanwhile, the previous quarterly futures contract from OKCoin closes this week. Below is a chart showing the quarterly contract open dates (orange), the previous quarterly moving to biweekly (blue), and the previous quarterly contract closing (yellow).

Volatility during these three weeks has previously signaled a bullish exhaustion, and a bearish upcoming quarter. Stability has signaled accumulation, and the bottom of bullish continuation. The spot price has been extremely volatile in this time period, which indicates a bearish upcoming quarter.

At the same time, the People's Bank of China (PBoC) continues to apply stricter Know Your Customer and Anti Money Laundering requirements. Traders using chinese exchanges are now required to register for accounts in person, or withdraw their current balances. Its unlikely that domestic Chinese exchange volume will return to previous levels anytime soon, and LocalBitcoin volume will continue at historic levels.

Japan therefore continues to be the market leader in volume, with 50% of total bitcoin volume traded in the past 24 hours. Japan recently became very accepting of Bitcoin as a currency, recognizing it as legal tender.

Due to the enormous selling pressure over the last week, the bull trend beginning in 2015 is currently being threatened. Lets gather some evidence on high time frames to assess the safety and validity of the longstanding bull trend.

For the first time in the entire trend, the monthly candle is a risk for a bearish engulfing candle with a few days left to close.

There is also the possibility of a Cup and Handle, a bullish continuation chart pattern, forming. However, there are a few caveats and conditions.

First, Cup and Handle patterns in traditional markets typically have an age expiration, and this formation is far past that expiration. Second, the ideal volume profile is one with a descending nature, which is definitely not the case here (not shown). Third, the Cup and Handle remains valid as long as the handle low closes above the 0.50 fibonacci retracement level. The smaller the pullback, to say the 0.618 fibonacci retracement level, the higher the probability of bullish continuation. Fourth, the measured target for continuation is taken from the cups horizontal resistance to the low and projected upward, again from the horizontal resistance. This yields a target of ~$2,100 with a 1.618 fibonacci extension of $1,789. It should be noted that upon breaking the horizontal resistance at ~$1,200, there is typically a retest of the horizontal as support. Overall, this pattern has many months yet to complete, but has begun to form and is worth watching.

On the weekly time frame, a powerful trend indicating system is Heikin-Ashi (HA) candles, which use open and close data from the previous period, and open and close data from the current period.

An open and a close above the previous period suggests strong momentum of the given trend. An open and a close within the bounds of the previous period suggests a slowing of trend. A color flip from green to red or red to green indicates the possibility of the beginning of a new trend and the end of the previous trend.

Depending on the exits and stops, the second consecutive green weekly candle after a red candle has been an excellent entry this entire trend. A bullish continuation is likely should two consecutive green weekly HA candles occur.

On the daily time frame, two indicators provide further details after a large drop: Ichimoku Cloud and Pitchfork.

Ichimoku Cloud uses moving averages and dynamic support and resistance to make projections of key zones, as well as capturing 80% of any given trend. As long as the price remains above the cloud, sentiment remains bullish. Price in the cloud indicates a neutral trend, and below the cloud indicates a bearish trend.

When the Tenkan (T) is over the Kijun (K) sentiment is bullish. K over T would indicate bearish sentiment. When the Lagging Span (LS) is above the cloud and above the price sentiment is bullish, below the cloud and price would indicate bearish sentiment. The best entry signals for the cloud occur when trend is obvious, but 1 or 2 of the signals have yet to become confluent with a higher timeframe trend.

Since the trend began in late 2015, price has only closed below the cloud once, in early August. This was due to selling pressure created when the Bitfinex hack became public knowledge. Within 35 days the trend corrected, and returned above the cloud. After this most recent 30% selloff, price was again at risk pf closing below the cloud, a bearish trend indicator.

Yesterdays candle closed as a dragonfly, which typically indicates that bearish momentum has been exhausted. Price also remains in the cloud which, is classified as a neutral trend indication. The TK lines are touching and uncrossed, a long exit signal if you were still long from the previous bullish TK cross on February 7th. As a whole, the indicator is signalling a trend reset, an opportune time for profit taking.

A bullish re-entry signal would include price above cloud, bullish TK cross, and LS above price and cloud. All of these conditions will probably take a month or more to complete. Including the OKCoin quarterly contract theory, it may take another three months of price stability before bullish momentum continues.

With the Pitchfork indicator, shown below on a Bitstamp, each diagonal of the Pitchfork can be thought of as a PRZ or support/resistance line. The upper blue diagonal zone being most overbought or the top bounds of the trend and lower blue diagonal zone being most oversold or the bottom bounds of the trend.

Price briefly closed in the lower bounds of the Pitchfork and is currently retracing closer to mean. The red median line remains the high probability target of the immediate move over the next few weeks.

When diagnosing the health of a trend, the 50 day and 200 day Exponential Moving Average (EMA) on the daily time frame is very valuable. Much like the Bitfinex hack and subsequent trend reset in August, price bounced from the 200EMA. Again, this suggests trend continuation over trend reversal.

Adding an oscillator to the mix, such as the Relative Strength Index (RSI), determines market momentum. Divergences occur when price action does not match momentum.

A bearish divergence is created when price makes a higher high but RSI does not. This suggests weakening of bullish momentum. A bullish divergence is created when price makes a lower low and RSI makes a higher low. This suggests weakening of bearish momentum.

Divergences suggest trend reversal, however, divergences can continue growing until the reversal becomes obvious and should be thought of as a lagging indicator.

There are hidden divergences, which require further explanation. A hidden bullish divergence is created when price makes a higher low and RSI makes a lower low. This indicates, despite an increase in bearish momentum, bearish pressure is being exhausted.

A hidden bearish divergence is created when price makes a lower high and RSI makes a higher high. This indicates, despite bullish momentum, bullish pressure is being exhausted. Over the course of this trend, hidden bull divergences on the daily time frame have been a strong indication of bullish continuation.

The current hidden bullish divergence holding would indicate strong bullish continuation from this point forward.

Lasty, on the four hour time frame, there is currently a completed and active bullish butterfly harmonic pattern. Harmonic patterns typically have a target zone of the 0.50-0.618 fibonacci retracement zone. A secondary target of the diagonal resistance from the previous double top is also a viable target.

BU hard fork fear, uncertainty, and doubt remains ever-present, until, if, or when it happens. Long term holders will see this as a price blip in the grand scheme of things, whereas risk-averse traders would do better staying out of the market for now, until BU, SegWit, or both are activated. With a 30% drop from all-time high, price is beginning to show signs of a bottom and trend reset. This may precede a period of relative stability over the next three months, followed by bullish continuation to $1,789-$2,100 by years end.

Read more:
Bitcoin Price Analysis - Indications of a bottom - Brave New Coin

The bitcoin ETF may still rise.

After a March 10 Securities and Exchange Commission ruling that nixed an official exchange-traded fund for bitcoin , many saw the issue as settled. But Bats BZX Exchange, which would have listed the ETF on its exchange, has revealed it will appeal the SECs decision.

The SEC turned down the ETF earlier this month because the online exchanges that bitcoin is traded on are not regulated, and therefore susceptible to fraud and other manipulation. (Read: Everything You Need to Know About the Bitcoin ETF.) Had the ETF been approved, it would have tracked the price of bitcoin and made buying and selling them as simple as a stock transaction.

The ETF, known as the Winklevoss Bitcoin Trust, was created by Cameron and Tyler Winklevoss, who were made famous (and quite rich) thanks to their lawsuit against Mark Zuckerberg over their involvement in Facebooks creation . The two brothers have been trying for years to bring bitcoin to the mainstream, and the failure to get approval for their ETF is a big blow to that cause.

Although bitcoin has been around since 2009, it didnt really become part of public consciousness until 2013, at which point its value skyrocketed from around $140 in late October of that year to more than $1,100 a month later, according to Coin Desk. But almost as fast as the price shot up, it crashed back down. Since then, it has taken more than three years for bitcoins price to make it back to the $1,100 mark, finally reaching it in January.

One bitcoin currently trades for $1,047, down from $1,258 before the SECs ruling. Large price swings in short time frames like that have happened frequently in bitcoins past, and that volatility was another reason the SEC declined to accept the Winklevoss ETF. Unlike other currencies such as the U.S. dollar or the Euro, whose values change incrementally and in a fairly predictable fashion, price fluctuations in bitcoin can be absolutely monstrous and it isnt always obvious what is making the price move.

One thing to note is that even though Bats will appeal the decision, there is no guarantee that the SEC even has to act on it in any way, let alone actually reconsider its choice. But if the ETF is approved, it would likely move bitcoin from being seen as a curiosity on Wall Street to being something investors see as worth legitimate attention for the first time.

Continue reading here:
Why the Winklevoss Bitcoin ETF May Not Be Dead Yet - Fortune

With a hard fork looming, BitGo, a multi-signature bitcoin wallet, has advised its customers what to do in the case of a new chain, whether it is Bitcoin Unlimited, which BitGo deems unsupportable, or a supportable option such as Segregated Witness.

Ben Davenport, co-founder and chief technical officer, advised users in a recent blog what actions BitGo will take and gave recommendations on what they should to in the event of a hard fork. BitGo did not assign a high probability of a hard fork until recently.

BitGo will not support Bitcoin Unlimited, which it does not consider supportable. It will support Segregated Witness, (SegWit) which it consider safe and tested in the core code.

BitGo believes any near-term fork will be contentious and bad for the bitcoin ecosystem. Brand dilution and user confusion will remove billions of dollars from the bitcoin market capitalization, Davenport noted.

SegWit, on the other hand, will provide additional block space in the near term.

BitGo cannot predict how the scenario will unfold, but the company will move as quickly as possible to provide solutions to protect customers interests.

Any hard fork introduced without industry-wide consensus will be an altcoin, regardless how much hash power that coin has. The majority of bitcoin exchanges share the same view, Davenport said.

If a hard fork were executed in a supportable manner, BitGo would support it with an API as soon as possible.

To support a hard fork, according to Davenport, it must meet the following:

1. The hard fork has to be coordinated by a clear on-chain mechanism and have a grace period between activation and launch.

2. It must provide strong two-way protection, whereby transactions are only valid on one of the two chains. Minus this measure, users can safely transact separately with splitting techniques that place an excessive burden on the end user.

3. It has to offer wipe out protection, so that once it forks, it remains permanent. The new forks software should not be capable of producing a reorganization back to the original chain as it will wipe out the new chain.

Bitcoin Unlimited does not meet any of these criteria. In addition, there are problems with emergent consensus that can lead to ongoing network splits and reorganizations of arbitrary length chains based on the way miner groups establish consensus parameters.

There are also concerns about the quality of the peer review process and the general code of Bitcoin Unlimited. Because of this, BitGo will not support a Bitcoin Unlimited hard fork in its current form. BitGo will change its position on Bitcoin Unlimited if it makes changes to make the fork supportable.

Davenport recommends users take the following actions if the Bitcoin Unlimited hard fork launches.

1. Pause any outgoing transaction activity from BitGo. Otherwise, transactions can occur on both chains.

2. Keep in close contact with BitGo for assistance in moving coins safely or in splitting coins. BitGo will help customers split their coins, but it cannot determine how long this will take.

3. Once a hard fork has resolved itself back to a single chain due to it being abandoned by miners, or a splitting plan has been deployed, it will be safe to transact again on the original chain.

Should there be a supportable fork, BitGo recommends the following steps.

1. Continue to safety transact on the original network with the BitGo API. Users will not be able to transact on the new fork immediately. Transacting will not affect the coins on that side of the fork.

2. Be ready for block times on the original network to increase significantly, due to an increased load on the network. Execute only necessary transactions and be ready for possibly higher fees for a number of weeks due to the extendednumber of blocks.

3. Transact the value on the new coin by waiting for BitGo to add support for the new coin, or use the two keys with software built by others. BitGo cannot commit to any time frame for supporting the new coin.

Also read: Heres why a hard fork cant work

Malicious forking that undermines the existing minority chain with excess hash power is also a possibility. This can create a chain of empty blocks or a working chain suddenly experiencing a chain reorganization many blocks deep. BitGo considers this to be the same as a 51% attack on the bitcoin network.

In such a case, BitGo recommends halting all bitcoin activity, including outgoing transactions and crediting incoming deposits. One cannot make normal assumptions about block confirmations to finalize a transaction.

Featured image from Shutterstock.

See more here:
BitGo Reveals Hard Fork Planning; Will Not Support Bitcoin Unlimited - CryptoCoinsNews