Bitcoin BTC/USD price analysis: consolidating at resistance on low volumes

btc price chart

The crypto market has strengthened this morning with bitcoin 1.8% firmer at $6,587 and XRP leading the charge for a 4% gain to $0.530.

Bitcoin’s continued consolidation at a base around $6,500 is still below major resistance seen at the 200-day simple moving average (200MA) at $6,566 (red line). Naturally you will notice that the price at pixel time is sitting just above the 200MA.

btc chart

BTCUSD 1-hour chart, 4 October, 2018. See the live chart below (courtesy TradingView)

Up until now the 200MA has been a major obstacle so today could be crucial. The lack of downdraft in the tight range-bound trading may attract more buyers from here, on exchanges and in the burgeoning over-the-counter (OTC) market where institutions and high-net worth individuals predominate.

The sub $4 billion daily BTC volume is pretty anaemic, so confidence in a strong northerly trajectory has to be muted unless there’s a decisive close above $6,600.

As our XRP price analysis yesterday indicated, although the Swell event was actually greeted with selling, it has created the base for the next leg higher.

Elsewhere in the market, data storage platform Siacoin is 20% the better in the past 24 hours, according to coinmarketcap.  The rally follows news that the network will move to the v1.3.6 hard fork, coming at the end of October will “brick” ASIC miners.



XRP, OTC, CFTC

Supportive news flow has helped to put a step in buyers’ stride, so bullish traders have a prevailing wind.

Ripple’s Swell was a success, coinciding in the news the market has been waiting for – that it had customers using RippleNet.

That’s now happened, which means the narrative for Ripple moves on to the question of traction in  XRP liquidity usage.

Another positive for the market was a Bloomberg report laying out the extent of the OTC market in bitcoin.

These transactions are not impacting the prices o exchanges but the general market price as determined by an average of exchanges certainly influences the OTC price.

Commodity Futures Trading Commission (CFTC) chair J. Christopher Giancarlo said this week that crypto was “here to stay”, citing use case at the national currency level for crypto.

“There’s 140 countries in the world, every one of them has a currency. Probably 2/3 are not worth the polymer or the paper they’re written on, and those parts of the world rely on hard currencies. Bitcoin cryptocurrency may solve some of the problems.”

He continued: “I personally think that cryptocurrencies are here to stay. I think there’s a future for them”

Here’s the full interview on CNBC’s Fast Money:

Mike Novogratz has reversed his early position of a price target of $40,000 for year end, now saying BTC won’t see $9,000 until next year and last week’s US judge ruled that crypto are securities. Bulls can perhaps take comfort in Novogratz again being wrong. But seriously, we take his remarks as confirmation of earlier more accurate statements that we were in the trough of the bear market. Pull that all together and you have a picture of crypto starting to grow up.

But the Wild West hasn’t disappeared just yet, with more colour given to the level of market manipulation in crypto by, this time, a Wall Street Journal story.

In a way that can also be viewed as welcome in as far as it hastens the work of the CFTC which is itself conducting a manipulation investigation.

There was also the intervention by the prime minister of Malta in his address to the U.N. General Assembly, threw down the gauntlet to the world’s collective financial authorities. Malta’s crypto-friendly regulatory framework is a first for an advanced economy (the Med island is a member state of the EU), notwithstanding Japan’s helpful approaches by making bitcoin legal tender and licensing trading venues.

Other good news came from Argo, which has set up an index fund for retail investors, the BIT10 gives investors exposure to the top 10 crypto, providing it conforms with Bitwise’s criteria. In a competitive coup over Coinbase and its Bundles, Argo does not charge a fee, presumably making its money on the spread.

Venezuela, the Petro and the global stock market

There are two other matter that we should bring into consideration for our price analysis: the stock market and Venezuela’s Petro.

We are covering these later in the week in more depth but here’s the takeaways.

Whatever you think about the Venezuela government vis a vis its trustworthiness, it could be that the Petro holds its value better than the fiat that will still circulate in parallel. Yes the economic fundamentals haven’t changed, oil production has not risen, and the exodus of the citizenry goes on.

All that is true but the Petro (based on Dash) will open the country to the world’s capital markets in a way not hitherto seen. It could set in motion a crop of such national cryptos from sanctioned countries such as Iran and Russia. Contrary to received wisdom, we think the visibility of the Petro is a positive for the wider industry.

The other issue is the stock market, or to be precise the jump in bond yield on 10-year Treasuries above 3% to levels not seen since 2011.

Remember you read it here: we call the top for the equity markets, even if there is still some overrun from here.

Crypto could be about to head in the opposite direction in an emphatic display of negative correlation, which will be exactly what equity investors looking to diversify risk will be looking for.

 

About the Author

Gary McFarlane
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK's second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane

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