Bitcoin Primed

Before my bitcoin analysis just want to express my dismay over whats happening in Paris at the moment. Thoughts of love and peace being sent out to French, Syrians, Christians and Muslims.

My own fears are about the outcome of this terror attack, just as 9/11 trade centre attack/false flag, ushered in a new era of wars in the middle east and relentless clamp down of civil liberties I fear we will be subjected to even more of this kind of treatment. The powers that be never let a good crisis go to waste and I fear this will be milked to its utmost. With hundreds of raids on homes in Paris and French forces already bombing in the middle east, you have to wonder is this going to help matters or pour more gasoline on an inflammable situation? It is no secret that the west has wanted a war with Syria for some time, maybe this is the excuse.

Another spooky co-incidence like 9/11 is the fortuitous discovery of passports linking to the terrorists. Handy.

Looking at the bigger picture this is just more of the same. We are being herded into the new world order and possible world war wether we like it or not.

Anyway I hope you excuse my rant. With that off my chest heres some bitcoin analysis. I’ve shared this idea on TradingView and thought I might as well add it onto my blog too. Heres the familiar log chart from bitstamp.

Some of this analysis is repeated from ideas I’ve already expressed in this blog. I feel my bullish ideas provide a contrary opinion to the many bearish ideas expressed on Trading View currently.

In log price chart there is a well defined bull channel, shown in green which goes back to 2012 (and possibly earlier if MtGox data were available). Recent spike up to $500 ended exactly on midpoint of the uptrending channel (supporting the validity for the trendlines). Other evidence for these trendlines is provided by the upper trendline of the channel which supported bitcoin multiple times while it was in bubble territory before finally giving way as the price went on to reach its post bubble low.

The recent spike is reminicent of ‘mini’ bubble in bitcoin in 2012 before the huge bull moves began.

In the short term if horizontal resistance at $320 doesn’t hold then price should find solid support at around $270 ish which will be a great place to go long if it gets that low, with sell stop under the channel.

With bitcoin already very depressed after the collapse of the last bubble there is plenty of room on the upside. Bitcoin can get past previous all time highs while still in the channel, before even getting into crazy bubble territory.

For fun I’ve shown possible path price might take as the halving mania and price pump begins to take hold using some black arrows.

Mini bubble

On 4hour chart the recent rise to $500 then fall down to about $300 looks like a bubble, or in the case of bitcoin a mini bubble. We all know a real bitcoin bubble when we see it, dwarfing all time highs etc. So I say this is a mini bubble.

Heres the 4 hour chart. Note all charts on this post are using log price scale which is my preferred view usually.

If this is to follow a normal bubble kind of shape then we might expect a ‘dead cat’ bounce. And as I write bitcoin appears to have started rebounding quite strongly. Although it is disheartening to see price fall so far from $500 down to $300, especially if you bought during that rise, take comfort in the thought that $300 looks like it is the new $200.

If price does fall below $300 I would imagine it to bottom on the lower trendline of my up trending channel, currently around $265. But it might never get that far. For me the overall context of bitcoin is now bullish rather than bearish. We’ve already seen the break out from the giant bear trendline and now the break above the horizontal ‘accumulation zone’. We will probably have to endure a few more volatile ups and downs before the next big move (up), as this market corrects and absorbs the new levels in price.

Zooming out to 1 week chart you can see other mini bubbles which followed in the wake of the first giant bitcoin bubble (which isn’t shown on this chart as the data doesn’t reach far enough back on Bitstamp).

Note on those past mini bubbles dead cat bounces bottomed higher than the first fall, I’ll be looking for something like that again in the aftermath of this mini bubble with an upwards trend becoming more and more obvious as time goes on.

As always note my disclaimer, that my opinions are my own and freely shared but I am not advising anyone what they should do in their own trading.

Lift off

Not really unexpectedly bitcoin has steamrollered the top of the horizontal channel of my last post and for good measure is already up to $400.

Heres a 4 hour chart from Bitstamp

Ah this kind of rise reminds me of the gold old days, like when this happened back in Feb 2013, the start of a new bitcoin mania and bitcoin broke up above $20 on its way to challenge the all time high of $32 at the time.

Back to today, looking at longer timeframe gives more perspective. Heres a look at the weekly chart on log price scale.

By any stretch that last green candle is quite a big one. As you can see this chart has an upwards trending channel shown on it which I’ve featured in a few of my recent charts. After breaking up from the horizontal range of 2015 there doesn’t seem much to me stopping this rally spiking up to the middle of the channel somewhere near $500. Perhaps to end there (for now) or not.. who knows?

So why is bitcoin shooting up? Zerohedge is pointing to chinese capital controls being avoided. However with a halving drawing closer bitcoin has another reason to start going up. Suddenly all news is good news.

Continuing looking at the channel its interesting to note that bitcoin could get close to the old all time high and still be within the channel. If it goes on another bubble how high could it go? Mind boggling to think. But anyway without getting too far ahead lets enjoy this for what it is. Hope you accumulated some cheap bitcoins in the area I was calling the accumulation zone.

Dash crashing

With bitcoin continuing to look bullish not so with Dash. Heres a look at a Dash chart from the Cryptowatch website using data from the Poloniex exchange.

Chart is showing all Dash vs Bitcoin data available with 1 week candles.

While bitcoin has remained mostly flat all year by contrast Dash has risen close to its all time high (in terms of ratio with bitcoin) and subsequently gone into a long decline. At the moment selling volume appears high and price is falling steeply. Could it be Dash is near capitulation ?

Although the technical picture looks quite grim with most uptrending lines now broken a falling wedge can be considered a bullish sign. Dash is looking oversold in relation to bollinger bands and RSI.

So what is going wrong with Dash? The fundamentals of this coin seem remarkably good. Dash claims to have solved several issues which are hindering bitcoin at the moment and which bitcoin may never resolve eg incentivised nodes (called masternodes) are keeping the network strong, a budgeting system to fund other developments as voted by the network. Built in coin mixing and ‘instant’ transactions are all very exciting features. The roadmap going forwards is even more ambitious.

Noteably the masternode network is continuing to grow which is a contrast with the fall in price. Currently dash has upwards of 3000 masternodes a number which appears to still be growing.

toknormal provides very interesting discussion of the economics of this in the forum here which I highly recommend reading.

I can only really guess reasons for the current fall in price. Maybe rebranding from Darkcoin is causing a kind of hangover. Dash does not seem to feature prominently in many sites where it used to when it was darkcoin. Darkcoin charts were available on tradingview and bitcoinwisdom but both no longer have Dash. (I think this is because bitfinex dropped Dash). Is this a failure of PR perhaps ?

Dash is also tainted with accusations of instamine and the forum threads in bitcoin alt section are plauged by Monero fans endlessly accusing Dash of being a scam due to the instamine. In fact this trolling seems very organised. Without going into endless detail I will just say that in my opinion yes there was an instamine however this doesn’t put me off. In fact I don’t think there exists a ‘fair’ way to launch a coin but that is maybe a whole other topic. There have arguably been benefits from this instamine one of which is that the dev were able to work full time on the project instead of it being a just a hobby on the side. Anyway this can repeat endlessly and I will leave that there as my 2 cents.

In closing I guess I just want to put out a friendly note to say that although Dash looks down, the fundamentals are very promising, I wouldn’t write it off yet.

LIft off… maybe

Bitcoin is on a bit of a run, which is something I always enjoy. So with this in mind perhaps time for an update of my ideas and observations.

As usual please note my disclaimer and that I am not an expert in investing so please do your own research.

I’ll start with a chart, which is showing bitstamp on quite a large timescale with 1 week candles and log price scale.

Its become a bit cliché to shout ‘to the moon’ every time bitcoin rallies, but the real honest truth is that bitcoin is prone to large bubbles and has had a few already in its short existance. It is certainly possible for another one to develop. As bitcoin is still small compared to other global markets with lots of scope for investors to want in only to discover the limited supply. If it does go on another bubble you hopefully want to be in early and out with profit of course.

So could it be a ‘moon’ kind of move is already in its early stages ? Or is this just another rise within the flat channel we’ve had all year ?

Either situation is plausible at this stage. If bitcoin gets above $320 I’d say the bullish scenario looks very possible, until then I have a bit of caution that price may continue stagnating. There are still headwinds which as far as I know are not resolved, not least blocksize and scalability. But for bulls it is heartening to see that this is not enough to push bitcoin below $200 which is looking like a very solid floor so far.

If bitcoin is to go on another rampage it will be fueled predominantly over the next halving which is slowly and inexorably drawing nearer. This might swamp the headwinds I’ve already mentioned. As a recent example of a halving on price look at the bubble litecoin experienced recently. Also note in litecoin the bubble occurred and popped before the halving actually happened. In fact only later does the reduced inflation of supply actually start bearing on price, the bubble is pure speculation. Is the litecoin example a precursor of what may unfold in bitcoin?

If the bull scenario does unfold then maybe the green bull channel may give some idea of how it may develop. More on that if we get above $320 first.

Gold Silver Ratio poised to head down

Switching to another of my favorite topics heres a quick look at the Gold Silver Ratio.

This chart goes back to roughly 1984 the year George Orwell predicted a totalitarian govenerment. Which in hindsight, I think he more or less got right. Did you know Intel agencies can covertly switch on your smart phone microphone and evesdrop whoever they choose ?

Back to the topic of Gold and Silver Ratio. What the chart is showing is a large channel going back several decades. When the ratio is at the top of the range silver is cheap relative to gold and when at the bottom its the other way around with Silver expensive compared to gold.

We are seeing now that ratio is jammed up at the top of the channel and much more likely to fall from here than break upwards. Signiying that Silver is a better bet than gold at the moment.

To me this portends a rally in Silver (and probably Gold too) which will send the ratio back down perhaps all the way to mid 20’s.

Heres closer view of a more recent time frame with arrow showing which way I expect this to break..

Gemini ‘Exchange’ to go live

So after all the waiting and anticipation bitcoin will get a new ‘exchange’ (not an ETF as I first posted) set up by the Winklevoss bros, to start trading on Thursday. Its the first bitcoin exchange of course but this will be high profile I guess.

The Winklevoss twins. (not really supporting Dash)

More background to the story from coindesk.

With this and halving scheduled sometime next year is bitcoin finally going to overcome this flat period of dullness and move on to new heights? Or is blocksize infighting still going to spoil the party?

Looking at a chart, it is becoming harder to make a bullish or bearish case, in reality the entire year so far bitcoin has been constrained in a horizontal channel.

Heres bitstamp with 1 week candles.

So I’d imagine the first target to really start feeling bullish is to see bitcoin get above this horizontal channel.

Despite reasons for bullish optimism I guess I’m feeling a bit cynical myself. Although bitcoin has real possibility of charging to new all time highs in next year or two. Its a bit like the the original dream is fading along with that. Block size is going to mean further centralisation. Bitcoin is not really the decentralised entity with zero fees that was promised in the beginning.

Time for another look at bitcoin

Last bitcoin post I was lamenting the failure of cup n handle formation which I’d been watching. But whats been happening since then? Lets take a look ..

I’m using log price scale again for this chart with timescale on this chart going back a couple of years and 1 week candles.

Price has dropped recently but has failed to convincingly fall back into the bear trend which was below the red line. It looks more like a retest of a line which was previously resistance now support. And started a bit of a rebound.

I’ve added in a potential bullish channel to watch, will these lower or middle trendlines of that channel provide expected resistance or support ? I guess time will tell. The perma bull part of me wants to see a rising channel though so I’m hoping it lasts.

The whole block size shit fight has not yet gone away and uncertainty remains over what will happen eventually to reach solution. Bitcoin may even switch to a new fork. I confess to not understanding enough about this to have an informed opinion. (In fact I’m a bit ignorant about what the fork really means for a bitcoin user… Will I have to download a new wallet to convert my old bitoin to new XT bitcoin? Is this a one way thing that once you have bitcoin XT theres no going back to bitcoin core? Or can you have both like double bitcoins? What does it mean? Double rainbow!! )

But anyway I instinctively don’t like the thought of block size increases being done automatically based on time intervals which I think is the essence of the XT fork and seems far too ad hoc to me. Equally bitcoin core seems hell bent on keeping 1M blocks come what may and resisting increasing block size, which to be honest is ludicrous. I really don’t like the thought of where this leads to which is an eco-system where fees have to rise higher and higher for miners to accept your transaction in the block which is too darn small. I have heard many miners are supporting something, I forget the name {will edit post later if I find it} where miners decide how big blocks should be, which based on limited understanding on my part sounds like sensible approach.

Anyway more research is required on my part to understand this whole thing and decide which mast to nail my flag to. But for now I’m cautiously optimistic that despite the block size shit fight it will eventually resolve in a good sensible way, and price will fail to capitulate to new even lower post Gox bubble lows. Then let the new rallying begin.

Shemitah !

Sharing this first because its interesting and also because one of my charts is featured on 5 min mark. A small moment of fame for afbitcoins !

Collapse on Sept 15

Already the S&P500 not looking good. Can the plunge protection team again keep this thing up!? I’ve been thinking this feels ‘toppy’ ever since wedge in green failed.