Bitcoin Price Analysis – June 9th
Bitcoin Strongest Performing Currency in 2016
Bitcoin edged up to $595 on Bitstamp, a 21 month high just shy of $600 resistance. Bitcoin now leads the list of best performing currencies in 2016 versus the US dollar at +27%, above XAU gold ( +17.91%) and the Brazilian Real ( + 15.18%). Overall, it was a great week for bitcoin, with notable mentions alongside mainstream financial assets. A report by Ark investment and Coinbase, titled Bitcoin: Ringing the Bell for a New Asset Class compared the digital asset’s metrics alongside mainstream assets. Bitcoin is a real thing now! Always been to be fair.
Last week, on June 1, price was consolidating below $550, a recent high. In what has become typical of bitcoin price charts, a triangle consolidation pattern marked above by (3) and(4) preceded a break out to the upside accompanied by declining volumes,. Price pushed up to $588, retraced to find support and thereafter bounced off it to retest the ceiling at $595 at (1).
Like most resistance levels, $600 has not given up easy. Understandable because it dates back to June 2014. A break of this leave will push price to at least $680, the last high before the 18 month bear market over 2014 and much of 2015. The effect of such a significant level will affect how long and how deep a consolidation before another break out will occur here.
Yesterday, June 7 on Tuesday, a sudden sell off broke down to $562, before retracing up to $580 as of writing this. This trading range seems to be the settling range for this consolidation, and retest of the lower bound at $560 is likely. It does not look like there is much to worry about for the larger uptrend. It was a sudden fake out to test the bottom of the range.
“Looking at downside support of $550-560 with upside targets for resistance at $613, 639 and 664. As per the charts, the upside target of $650-664 is most realistic, based on historical resistance from 2014.”
A spokesperson for GDAX said
“The fast drop in price certainly attracted our attention. We’ve investigated this and can confirm it is all legitimate trading activity.”
Central Bankers Discuss Bitcoin and Blockchain at US Federal Reserve
The head of monetary institutions from 90 countries, congregated at the Federal Reserve in Washington DC, at a 3 day event co-hosted by the International Monetary Fund, World Bank. and the US Federal Reserve.
Can you believe it? A room full of 90 Central Bankers discussing the supposed identity of Satoshi Nakamoto? Bitcoin has come a long way and the thought of inclusion in an SDR basket of major currencies does not sound as ridiculous as a couple of years ago.
Notably, Chain’s Adam Ludwin, gave the keynote address while Bloq’s Jeff Garzick Nasdaq VP Fredrik Voss and Goldman Sachs director Tom Jessop, took part in a panel.
German Bank Ponders Hoarding Cash
According to an exclusive on Reuters, Commerzbank, one of Germany’s largest lenders closely examining how holding bulks of cash in vaults would materialize. As part of ECB’s monetary policy, banks are paying high costs in form of negative interest rates for holding depositors.
“Deposits by European banks at the ECB now stand at more than 850 billion euros, at a considerable cost to banks. Demand for loans in the euro zone, where the economy remains in the doldrums in some quarters, has not spiked despite the ECB measures.”
The trouble is, holding cash is expensive and a burden as logistical headaches and insurance against fire or theft. Ergo insurance says client inquiries are up.
This looks like a role for Bitcoin, in a future where cash use is minimal, central bank money is all digital, and banks need a digital cash.
Bitcoin Weekly Price Forecast
This week I am bearish, at least in the short term. I expect price to break up to $650 – $680 at some point, and accept that some consolidations and retracements will occur on the way up. Just like the current price action.
After running up against $600, a level from August 2014, price is ranging into a corrective pattern, one of many that could go as low as $540. It is only temporary, as a necessary move to pick up moment to have another go at $600. The chart above suggests a triangle corrective wave 4 Elliott Wave pattern, before a resumption of the trend.
It is a retracement of the larger leg up from $440 to $600, therefore could easily last 2 weeks. With the halving just 4 weeks away, there is bound to be a surprise break up. $650 – $680 would be first reasonable target.