Bitcoin: Insight and Analysis

Posted by Ryan Case | 03/11/2017 15:30

After opening at around 6,150 on Monday, bitcoin has continued its march higher this week, trading through the 7,000 handle on Thursday and reaching highs above the 7,500 mark earlier today. This equates to gains of nearly 22% this week.  

Technical Analysis

BTCUSD-daily-03112017.PNG

On the daily chart, a second steeper ascending trend line can be drawn off the 15 September low, which may suggest an accelerating uptrend. Furthermore, the spacing between the 10 October swing high, which came in around the 1 September high at 4,935, and the 18 October low, may also suggest a trending market.

However, the market has now extended away from the most recent trend line. A break of this trend line may lead to a market correction.

Market Developments

Tuesday’s move higher was accompanied by a decision by the CME Group, the world’s largest exchange owner, to introduce bitcoin futures by the end of 2017.

Exchange-traded bitcoin futures may bring many benefits to bitcoin traders and investors. Institutional investors, who have previously had limited access to trade bitcoin, will now be able to more easily access the market. This could lead to greater participation in bitcoin and also provide more clarity for traders on market positioning and sentiment, such as via Commitments of Traders (COT) reports. 

Overall, this development may suggest an increased role for bitcoin in financial markets, which with a market cap of more than 100 billion dollars, is in the same bracket as stock market giants such as Glaxosmithkline and McDonald’s, although it is not a stock itself. 

Week Ahead

Key events to keep an eye out for this week include:

1.    Amazon’s move into the cryptocurrency market

A CNBC article earlier this week revealed that Amazon recently purchased three new domain names: amazonethereum.com, amazoncryptocurrency.com, amazoncryptocurrencies.com. Amazon reportedly already owns the Amazonbitcoin.com domain name.
Coinbase Inc. added more than 100,000 users in one day following the CME Group, the world’s largest exchange owner, announcement of upcoming bitcoin futures, according to a Bloomberg article. Continued big name adoption of cryptocurrencies, such as by one of the world’s largest retailers, could lead to an ever growing user base and possibly higher prices as demand for the cryptocurrency increases.   

2.    Bitcoin hard fork

Multiple news outlets have reported an upcoming bitcoin ‘hard fork’. This fork could take place on or around November 16.
Since the bitcoin gold fork took place, the market has reached highs above $150, following an opening price around $105 of on October 25.   
 

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