Monthly Archives: August 2017

"SegWit is old news for the market."

So says crypto analyst Petar Zivkovski, and there's evidence to suggest traders largely agree. Despite just completing perhaps its most significant technical upgrade ever, the price of bitcoin is down just under 1% over the last 24 hours of trading.

To Zivkovski, this shows that bitcoin's upgrade, no matter how impactful, was for traders a classic "buy the rumor" event. He speculates much of the price activity in recent months was due to the upgrade prior to it being clear SegWit would be activated (thereby increasing and redefining network capacity), he notes bitcoin was trading below $2,000.

But before the network adopts the top-level payment networks and other next-generation features enabled by SegWit, Zivkovski expects a run of profit-taking.

Others are less certain here. Arthur Hayes, CEO of bitcoin derivatives exchange BitMEX, said that while the price will likely decline slightly in coming days, he expects it to "zoom higher" in the aftermath of the activation.

"My upside price target is $4,500 then $5,000," he told CoinDesk.

Elsewhere, comments hint that traders are just beginning to understand how cryptographic assets broadly respond to issues related to their technology. Charles Hayter, founder of exchange service CryptoCompare, for instance, chose to view it as the latest data point in an ongoing experiment on the matter.

Though he said it's likely to provide a "positive catalyst" long term, he hinted at an uncertain outlook in the coming days, remarking:

"With litecoin we saw a fall after the enaction of SegWit, but with bitcoin cash we saw a price rise on 8MB blocks being mined its half a dozen of one and half a dozen of the other for bitcoin."

Among analysts there was also a feeling that prices could be locked into the current range until November, when another technical change is anticipated for the network.

Given the controversy around the plan, and the possibility that it could result in the creation of a third major bitcoin asset, Hayes put forward this idea, arguing that while the price could creepabove $5,000, it's not likely to go much higher.

Elsewhere, developer and trader Jacob Eliosoff agreed that uncertainty is likely ahead as the market looks to price in those coming changes.

"I predict will be a huge mess and will do at least temporary damage to the price around the split itself," he said.

Level bubble image via Shutterstock

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No SegWit Bump? Bitcoin Price Shrugs Off Upgrade with Sideways Trading - CoinDesk

The Bitcoin network and price has been heavily influenced by Bitcoin Cash (BCash) and SegWit activation over the past few weeks. It is no coincidence that BCash was launched to directly compete in this manner.

The market has been struggling to continue to price in SegWit, a protocol improvement that lends itself to better network efficiency, and BCash, an attempt at direct competition to Bitcoin. This hypothesis can be evaluated by comparing various network metrics of both Bitcoin and BCash.

Prior to SegWit activation, BCash rose greatly in price. The increase was driven both from a technical basis of selling volume exhaustion, and likely a concerted effort to pump the price to increase mining profitability.

By doing so, miners who are coin agnostic moved their hash rate to BCash network for a better return. This activity may have also represented a specific mining pool or group of mining pools with an interest in the health of BCash.

In the meantime, transactions fees being paid to miners on the Bitcoin network are currently extremely high. BCash was created due to this very reason.

However, this may represent a ripple effect of network stabilization from the drop in hashrate creating a backlog in transactions. Although the backlog has been worse in the past with fees not as high, this was when Bitcoin was at a lower price.

The previous all time fee high was around the same time of a large temporary decrease in Bitcoin hash rate, before a difficulty adjustment occurred. This meant that average block confirmation times increased greatly, to above 16 minutes, and total possible transactions on the network decreased.

But hash rate has since rebounded, which should stabilize the network. Block size remains below the 1MB ceiling, which should be broken soon as SegWit is now active. This will in turn lower fees in the near term, making mining the chain less profitable.

The most basic analysis focuses on finding zones which are ranging versus zones with price action. Ranging zones can be thought of as zones of support or resistance, sometimes called orderblocks. There are buyers and sellers ready to jump into the market should it reach that zone again.

The recent increase occurred $200 above the previous orderblock, indicating the strength and momentum of the existing trend. Should a pullback occur, expect a stab into the ~$3150-$3470 orderblock.

Adding Fibonacci extensions, you can also estimate suggested support or resistance at the 1.618 fib, after measuring the extreme high and low of previous price action. Based on the two previous zones, there is fib resistance between ~$4800-$5000 on the next leg up. Expect the $5000 psychological barrier to hold, or a strong retrace from that level. Beyond the $5000 barrier, fib extensions suggest ~$5600-$5800 as the next pitstop.

Whenever the health of a trend is threatened, its important to fall back on what you know, so you are not driven by emotions, but rather, a tested and proven system. My favorite indicator for diagnosing the health of a trend is the Ichimoku Cloud.

The Cloud system is a constant, auto-drawn indicator which quickly offers an immense amount of valuable information on any time frame. The Cloud is best used at higher time frames as more data generally provides more accurate signals and less false positives.

The indicator 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.

On the daily timeframe, despite the distance from price to the Kijun, which signals heavily overbought conditions, a Kijun bounce has yet to occur. There was a perfect Tenkan bounce, which traditionally signals strong continuation, ie, the trend is so strong, mean reversion cannot even occur. It is important to consider price as overbought despite an attempt at an ATH test. The Kijun remains a valid pullback target if/when that should occur.

On the four hour time frame, there was a bearish TK cross above cloud, a long exit signal (red arrow below). This assumes you were not already stopped out using other indicators, such as Heikin-Ashi candlesticks or Bill Williams fractals. Additionally, there was a short entry signal when price closed inside the cloud. I refer to this as an edge-to-edge trade. The target for these trades is always the opposite end of the cloud, which can be thought of as the next rung of support.

This target zone was essentially hit, and price bounced quickly. As with any support or target, its important to place entries or exits +/- a few dollars from the target for this exact reason. Currently, there is no indication to re-enter a long based on the four hour time frame, as there has not yet been a bullish TK cross (green arrow).

If getting out and back in a trade so quickly seems like a wasted opportunity or overtrading, consider that Cloud only aims to capture 80% of the trend. You can always buy, hold, and hope for the best. The Cloud helps mitigate risk by signaling reliable entry and exit signals.

There was also a 50/200EMA cross on the one hour time frame, another version of the bullish entry signal, at about the same candle as the Kumo Breakout. This can be considered confluence for a long entry.

Another trend following indicator is the Pitchfork, with an anchor drawn from the July 16th low. The median line (red) of the Pitchfork gives the expected mean of the trend. Price will continually attempt to return to this diagonal, around ~$4600.

Each diagonal of the Pitchfork can be thought of as a potential reversal zone or support/resistance line. The upper yellow diagonal zone being most overbought, or the top bounds of the trend, and lower yellow diagonal zone being most oversold, or the bottom bounds of the trend.

With SegWit approved the bitcoin network can now handle more transactions per block and therefore more transactions per day. For many, this is an important metric for understanding the value of the network as a whole. Technicals suggest at the very least a retest of all time highs, with $5000 being a likely new record very quickly.

More here:
Bitcoin Price Analysis - Retesting all time highs - Brave New Coin

Bitcoin rose modestly on Thursday as the most prominent digital currency recovers from recent sharp declines that briefly put it into correction territory.

Moves for the cyber monetary unit come as Securities and Exchange Commission temporarily suspended trading in the shares of First Bitcoin Capital Corp. BITCF, +4.68% because of concerns about the accuracy and adequacy of public information on the Canadian company.

Still, a single bitcoin BTCUSD, +2.62% rose 2.3% to $4,287.64, advancing for a third straight day, according to Coindesk.com data, and sending its total market value to about $70 billion, according to digital-currency research site Coinmarketcap.com.

Despite recent advances, the digital currency, is still about 5% below its record set on Aug. 17, though year to date, it is up more than 300%.

Bitcoin prices have been volatile, largely due to issues surrounding the need to increase transaction sizes in the blockchain network. Traditional bitcoin participants agreed on a new protocol known as Segregated Witness, or SegWit., which they believe solves bitcoins scaling issue.

The adoption of SegWit hasnt been smooth, with a minority of users rejecting it, leading to the split of bitcoin that created Bitcoin Cash.

On Thursday, the price of Bitcoin Cash fell 1.6% to 649.32, bringing its market cap to $10.7 billion.

Ether tokens, the chief rival to bitcoin, which runs on the Ethereum network, was little changed on Thursday at $323.74. Ether on Wednesday rose 0.4% to $325, its highest level since June 23. While it remains below an all-time intraday high above $400 hit on June 12, it has more than doubled from a recent intraday low hit in mid-July. For 2017, it is up about 4,000%, bringing its market cap to $30.6 billion.

Read: This bitcoin $25,000 call is more proof of the cybercurrency bubble

The recent advances in bitcoin, along with the recovery in Ether, brought the total market capitalization of all cryprtocurrencies above $150 billion. The basket of cybercurrencies tracked by Coinmarketcap.com first broke above $100 billion in early June, meaning the space has risen by half in a little more than two months.

Meanwhile, shares of Firtst Bitcoin Capital Corp traded at $1.79 before its halt. The stock traded at $0.05 at the start of the year and gained more than 6,000% year to date.

First Bitcoin Capital Corp. is a Canadian corporation that invests in companies that mine bitcoin and operates exchanges and digital wallets, according to their website. The suspension was effective Thursday 9:30 Eastern Tim until noon Sept. 7.

In other news, A regulatory arm of Canada on Thursday signaled a warning about so-called initial coin offerings, or ICOs, which have spiked in popularity. The Canadian Securities Administrator, although acknowledging the benefits of raising funds by digital tokens, it said there are big risks.

However, they can also raise investor protection concerns, due to issues around volatility, transparency, valuation, custody and liquidity, as well as the use of unregulated cryptocurrency exchanges.Also, investors may be harmed by unethical practices or illegal schemes, and may not understand the properties of the investment products that they are purchasing, the CSA said, adding that it was monitoring developments in ICOs.

Read more here:
Bitcoin, Ether extend gains, even as digital currencies take a regulatory hit - MarketWatch