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.

10K Dump!

With continued developer infighting on how to resove scalability issues and a fork of bitcoin having been created, ‘Bitcoin XT’ (or something) and in the absense of bullish world events, such as Greece default, or China stock plunge, bitcoin has struggled to keep bullish momentum going.

So its goodbye to the cup n handle formation I was anticipating, and instead hello to the 10K dump in which someone sold 10 thousand bitcoins on bitfinex, causing price to fall through bottom of my rising channel. This scene of disaster looks like this

Note the bottom of up rising channel which I was expecting support gave way which was a bit of a critical technical area, allowing price to plummet where we see now. I’ve added in new lower lines, hopefully we’ll see that the bull slope is still active albiet from a lower price point.

Interesting to note on weekly chart with log price that the bounce happened roughly at an area which previously was resistance when bitcoin was still below my bear trend line.

For now I’m on sidelines wondering like many others what will unfold.. New lower lows? Maybe, if the block size debate continues dragging along and turning ever more ugly. Or maybe a new rally spurred on by world events.. Maybe I need to consult my crystal ball.

Gold !

I don’t even know where to start talking about gold, it defies belief that gold continues to plummet and is now making new 5 year lows at the same time as demand for the physical stuff is soaring and debt laden economies globally continue to debase their currencies and accumulate yet more debt to service their debt.

To believe some people gold is now heading not only sub $1000 but down to $700 or even $400 you name your low price and someone is predicting the bottom there.

Gold is manipulated by the biggest most powerful entities, this is strategic and to keep the fiat ponzi corrupt monetary system alive as long as possible. Is there anyone out there who can deny this with a straight face?

In fact I’m not really going to try and talk about gold manipulation any further but instead look at the charts, bearing in mind that the lines on the charts have most likely always been heavily influenced by periods of manipulation going through the ages.

Heres a chart showing 1 month candles.

I’d say it looks like gold may be heading to the bottom of this channel which I’ve marked, corresponding to a price will fall to about $1000. Look for the media to gleefully leap on it if it goes slightly below $1K. Will that be the final capitulation where the weak hands are finally shaken loose? If not then I guess gold will continue this miserable path down along this bear channel. But for how long can gold remain bearish? Is the economy really recovered? Is the Fed really really going to raise rates?

Looking back, the world came off the gold standard in 1971, which incidentally, when announced was supposed to be temporary although here we are stuck with it more than 40 years later.
(Funnily enough zero interest rate policy and QE is supposed to be temporary too in response to the financial crisis of 2008 but so far seem to be continuing quite merrily too.)

Heres a look at gold price over that period, again with 1 month candles, starting in 1971 through to today.

With the world moved away from gold to pure fiat, shortly after gold went on a huge bull run rising from $35 as investors realised the currency was now totally unbacked and therefore would not hold value. However in the mid to late 1970’s gold suffered a bear market. Eventually the bull came back for a second even bigger leg up to the top of the channel I’ve marked finally topping at about $850 (remember that’s valued in 1970’s dollars not todays dollars).

Could we be in the same place today as that time of the bear market in the mid 1970s? Obviously with my ‘You are here’ label, thats what I’m thinking in terms of, but of course this is only an idea I want to put out there. Target for this idea is gold to the approximate top of the channel and price of $10K.

Anyone for tea?

Its time for an update to my blog, in what will probably be first of two posts, (I also have some ideas about gold I want to put out there). In any case an update feels a bit overdue as quite a lot has happened since my last post.

So, staying on topic of bitcoin for now. Last post I felt confident we’d soon break $300, which we did however now we are somewhat below $300 again. How did that happen?

What else? Well there was a massive crash down to $150 on BTC-E !!!! This is not the first time it has happened, there was also a flash crash on the same exchange, back in February 2014

Heres a look at those two flash crashes on btc-e

In a way this crash has spooked me a little bit, the first one fell a lot further but stopped at a line which I use as the absolute floor but this latest one although smaller drop went under that floor. However maybe I shouldn’t read ‘too’ much into it ..

Whats going on in btc-e, why these crashes? From various different theories I’ve read it seems likely its enabled by the low volume on the exchange. Some traders have suddenly found sell orders triggered (by some large dump?), causing a cascade of selling and these people to lose out big time and in the mad rush unable to buy back in quick enough. Whatever happened it does seem very shady and makes one wonder if some insider knowledge is involved in this moves. Anyway the fact is someone has gained some very cheap bitcoins at the expense of others who probably never dreamed those sell orders being triggered. If there are other plausible reasons this happened I’d be interested in the discussion.

In the aftermath of this flash crash I have decided to revert back to using Bitstamp for my charting for now. I previously used Bitstamp and abandoned it when that exchange seemed to have its own difficulties. It makes me ponder which exchange is best as a proxy for bitcoin in general? Maybe I should be looking at one of the big chinese exchanges? For now, and for better or worse I’ve settled back on Bitstamp.

This also give the opportunity to remove all my trendlines and start with fresh eyes on a blank slate, not that theres much there so far.

Anyway there is this nice cup shape with whats looks like a handle forming.

If that bullish pattern does play out we might be looking at some price near the top of the channel I’ve drawn in. But maybe not before bitcoin drops further to complete the handle…

In reference to my last post I don’t really think there is any particular significance to $300 except that in US dollars it happens to be a nice round number. Being back below $300 looks to me like a needed correction after some fairly large bullish moves. Hopefully before long the bullish trend continues.

Bitcoin poised to surpass $300

Forgetting all the craziness in alts for a minute bitcoin is quietly making nice gains. With the bear trend beginning to disappear into the distance the way looks clear for bitcoin to continue upwards.

Heres a view from btc-e with 1 week candles and log price scale

Lots of green candles in a row sometimes heralds the start of a new mania but I think it will be a bit more subdued than that. I’m looking to see if there appears resistance in the middle of that rising purple channel. If bitcoin goes through that easily then the top of the channel may be visited which would be somewhere above $400. In my view its not too far fetched to anticipate that but lets get above $300 then middle of channel first.

Litecoin rampage

I’ve refrained from posting about Litecoin’s bull run so far but finally decided to take a look at see whats up. Note, I don’t own any Litecoin myself and not planning to buy into this rise so I only look out of curiosity.

Here’s a 1 day chart of Litecoin versus Bitcoin, ie LTCBTC from BTC-E exchange. Rising line means Litecoin rising in value relative to Bitcoin.

Jolly hockey sticks! I describe this as a rampage. Thats my technical term for a vertical rising chart. If you converted bitcoin to litecoin in the first half of May then congratulations! Thats like gone up by 5 or 6 times in value! (so far..) and thats at a time when Bitcoin itself is also up about 20% against the US$ !!!

So why this price rise? Well I can only speculate but for one thing Litcoin is due to have a ‘halving’ in near future which may be a factor. * Meaning of course the rate of minting of new Litecoins will drop by a half. I think it will be Litecoin’s first halving in fact (but might be wrong).

Another reason ‘could’ be that some holders of bitcoin see risk in the ongoing block size debate and lack of clear resolution about how to resolve and have decided to jump ship to Litecoin for now.

Maybe Litecoin is also benefiting from Greek referendum and Chinese stock collapse. Does Litecoin have same restrictions as Bitcoin in China ?

And many, which I don’t want to be a part of, are the herd stampeding in late looking for profits. However I also thought that when Litecoin was at about 0.012 less than a week ago and have missed large profits since as it continues its phenomenal rise. Knowing my luck I will finally be overcome by greed and go in just before it crashes.

Heres some more charts, similar chart zoomed out but with 1 week candles.

We can see that Litecoin is prone to these massive spikes up with at least 2 comparable if not bigger spikes in the past. On both occasions followed by massive crash. Is this one going to dwarf those that have gone before? Wether it does or not I don’t know but I do feel certain those that buy in too late will be left holding the bags which is the risk I’m not willing to take.

I’ll finish with same chart but this time on log price scale.

On this scale you can see that Litecoin had another huge spike starting from lower levels which wasn’t so noticeable on linear price scale. For historical interest I’ve marked in a bullish channel I used to look at which I lost interest in after Litecoin fell through the bottom of it. Similar to Bitcoin, Litecoin has also fallen below what used to be solid floor on log scale.

I’ve also added in a flat/bearish channel which I just spotted and ominously Litecoin is near the top of it.

For me we are already in the danger zone.

Blatent Intervention in Silver

With the Euro currency, one of the biggest currencies in the world, facing an existential battle in the aftermath of Greek Referendum you’d expect a bit of a pop upwards in Gold and Silver wouldn’t you? … Wouldn’t you ? You know a safe haven form of money like bitcoin.

What we get is silver down 5% to a 5 year low !!!!

Unbelievable MANAGEMENT OF PERCEPTIONS ECONOMY. This is sheer unadulterated MOPE. So blatent in your face, out in the open. It is totally obvious that Gold and Silver cannot, CANNOT be seen as alternatives to the monetary system. This intervention is so obvious, so much hubris they just don’t bother even trying to hide it anymore.

Disgusting, the lies, the mope the to hold this corrupt system together it stinks.

2015-07-07 19:00:33 - Blatent MOPE in aftermath of greek debt referendum

The end of the bear trend unfolding

On the same day the Greeks voted no to austerity conditions imposed on them, bitcoin has broken through the formidable upper resistance on my btc-e log charts. Not a total surprise, on chinese exchanges the corresponding trendline already fell some time ago.

On BTC-E it looks like this …

For me this is a huge bullish signal for bitcoin and I think also illustrates the contrast between the banking system and the ideals of crypto currency. Capital controls, bail-ins like Cyprus with banks. Or being your own bank outside that system, bitcoin (not forgetting physical gold, silver too). Apparently many greeks have tried to store value outside the system by buying cars which was hardly ideal but worked quite well. A shame more of these people don’t already understand bitcoin. The word needs to spread among greeks and everyone else that leaving money in the bank is a huge risk.

Perhaps we are about to leave or are now leaving what I’ve called ‘the accumulation zone’ but its not too late to buy in as long as you prepared to hold longer term.

Disclaimer – bitcoin is still risky and uncertain how it will scale as it grows so don’t bet everything on it a wise move is to also hold physical gold and silver, fine art, land, anything thats not shares or money in a bank basically. These are my opinions not investment advise.