Bitcoin Close To All-Time High
Bitcoin’s surge is associated with its technical details and an agreement that avoids a fork for the time being. In an article on Business Insider, we read:
Bitcoin has recovered somewhat from the drop in value seen last Sunday, with the price of the cryptocurrency reaching $2,701 at the time of this writing.
The stabilization seems to be the result of Bitcoin miners reaching an agreement on the enactment of the Bitcoin Improvement Proposal.
This agreement means the avoidance of a user-activated softfork (UASF), the possibility of which caused significant unease among investors.
This may be the case since investor uncertainty may have receded. This might mean that investor confidence is back. Also, the implementation of the Bitcoin Investment Proposal 91 (BIP 91) might translate into increased interest in Bitcoin as it could alleviate the current problems with network capacity. On the other hand, this information may already be in the price. At the same time, we’re seeing stories on Bitcoin in mainstream media. This is bearish as it suggests that investors may already be in the Bitcoin market, which would mean that buying power moving forward could be limited.
Extreme Move Up
Bitcoin’s Recent Surge
On BitStamp, we see the recent extreme move up, which brought Bitcoin close to $2,900. Recall our recent comment:
The rebound has continued so far (…) and our stop-loss was taken out earlier today. At the moment of writing these words, Bitcoin is not only above the 38.2% retracement ($2,182) but also above the 23.6% one ($2,487). This is a bullish development, at least at first sight, and the volume has been relatively strong so far. Not explosive, perhaps, but strong enough to make this move a plausible beginning of yet another move up.
What we wrote previously remains valid. Bitcoin is still above the 23.6% retracement level. So far, the recent surge has bullish indications as Bitcoin tested the 50% retracement and very quickly shot up to the upside. We’re now quite close to the all-time high and the way Bitcoin is traded at this level (if it is reached) might be very important for the currency.
Post Retracemen-Test Spike
On the long-term BTC-e chart, we see the magnitude of the recent move to the upside. We recently wrote:
We see a move below the 23.6% retracement level ($2,415). This is the first level that might trigger a much more serious decline, in our opinion. At the same time, the breakdown is not confirmed at the moment of writing these words and the volume on which the move has been unwinding hasn’t been particularly strong. All this means that we might actually be in the first stage of a significant slump. On the other hand, the risk of a bounce back to the upside is quite considerable. If we see a confirmed move down below 23.6%, we might have a shorting opportunity on our hands. (…)
This was followed by a move below the 38.2% retracement ($2,126) and even a brief move below the 50% one ($1,890). The fact that we saw an almost immediate rebound from this level and a move above the 38.2% and 23.6% levels in a matter of days is a very bullish indication. There’s one caveat here. The situation might seem bullish but we haven’t seen a confirmed move above the 23.6% level. So, the situation might change in a matter of hours now. Additionally, the current move is even more violent in terms of price than the recent all-time high was. With the volatility we’re seeing now, we wouldn’t be surprised to see a move to $3,000 and a re-test of the all-time high. At the same time, one daily close below 23.6% could turn the situation on its head to quite bearish. As such, we prefer to wait for an additional confirmation before considering a hypothetical position.
No change here as well. Right now, we might see a move to the all-time high or even above it. How Bitcoin reacts to such a potential move could tell us a lot about the next couple of weeks/months.