Every Monday, Lifting the Offer provides market analysis and price outlooks to prepare bitcoin traders for the week ahead. Check out the full archive here.
Bitcoin by the Numbers
Best Bits from Last Week
- American Banker: Cryptocurrency Comes of Age
- Cointelegraph: Andresen Will Shift Efforts to Bitcoin Fork, If No Consensus Reached on Block Size
- American Banker: Why Banks Are Testing Bitcoin’s Blockchain (Without Bitcoin)
- Wired: How the Tech Behind Bitcoin Could Stop the Next Snowden
- Fortune: This Lawsuit Could Sink One of the Hottest Bitcoin Companies (Xapo)
Bitcoin Price Outlook: Neutral
Last week’s price action was fairly uninteresting. The market continued to move sideways as traders expressed little to no conviction in the prior week’s events. This indicates that market participants are still searching for the appropriate entry point to start building new positions.
As current traders look for solid ground, the market continues to hunt for new buyers to help push prices higher. This raises the question of where the current market’s capital is sitting.
A good amount of capital may still be tied up from those who built long positions as the market ripped higher and broke through resistance levels from May 18th through May 25th. During this period the market rose over 6% triggering technical buy signals only to fall nearly 10% the following week.
Along with the capital stuck in underwater long positions, cash is also being siphoned off from the market every week. Unlike traditional markets, the majority of high volume bitcoin sellers are generally miners with little need to reinject trading profit back into the market. These sellers tend to consistently flow cash away from the bitcoin market to cover operational overhead, placing additional downward pressure on the price.
Trading Week Ahead
Are there bullish signs ahead? Is the market ready to rebound or will this dead cat continue to bounce?
The Bitcoin market may be shedding the declines from previous weeks after rising nearly 2% over the weekend. The OTC market also continues to be a decent source of liquidity with a total weekly trading volume that is equivalent to roughly 50%-60% of the volume experienced on exchanges. One thing hurting traders is the lack of reporting on OTC block trades. With more reliable data around OTC volume/pricing, exchange pricing would begin to reflect this information appropriately.
As for key pricing metrics, short-term support can be found at $220 with resistance at $230. Should we break $230 with little resistance, traders should be aware of their aforementioned peers who went long at the bottom of the most recent sell off during the last day of May (into June 1st). If resistance is not met at $230, we will surely experience resistance within a percentage point of $230.
This Week in Bitcoin’s (Limited) History
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Bobby Cho is the Director of the Institutional Client Group at itBit. Previously, Bobby was Vice President of Trading at SecondMarket specializing in trading bitcoin and illiquid asset-backed securities.