Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Holiday Nightmares - Your Caravan is Missing! - 20th Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Bitcoin Price Tense Days Ahead

Currencies / Bitcoin Jan 27, 2015 - 05:09 PM GMT

By: Mike_McAra


In short: no speculative positions.

The Winklevoss twins seem to be connected to everything about Bitcoin that has hit the media recently. This is an exaggeration but the brothers have been reported to be working on a new regulated Bitcoin exchange, on a Bitcoin ETF. It turned out that they were beaten to opening the first regulated exchange by Coinbase but the brothers seemed undeterred as they spoke with CNN Money:

They [the twins] predict Bitcoin's market capitalization could easily skyrocket to at least $400 billion, or roughly the combined size of modern day payments companies like American Express (AXP), Visa (V), MasterCard (MA) and Western Union (WU).

But the Internet entrepreneurs are taking it one step further. They believe Bitcoin could one day morph into a gold-like asset class -- or even surpass it.

"If Bitcoin is a better gold or seen as a type of gold-like asset, then it could be in the trillions on a market cap," Tyler Winklevoss told CNNMoney. "We do feel those are very real possibilities."


The twins believe such an ETF would appeal to gold bugs because Bitcoin, just like gold, can be used as a hedge against inflation. They say Bitcoin is more durable, divisible and affordable than the yellow metal.

"If you like gold, there are many reasons you should like Bitcoin," said Cameron Winklevoss.

These statements seem somewhat optimistic. With a total cap of under $4 billion, Bitcoin is very far from the targets proposed by the twins. The current cap of the currency is about 1% of what the brothers envisage for the cryptocurrency. Is it possible for Bitcoin to overtake part of the credit card and money transfer market? Yes, but Bitcoin getting close in size to the combined market cap of major credit card companies seems highly speculative. Bitcoin could go in this direction but we haven’t quite seen that yet and if it’s to gain market cap, we would argue this would take place over the long term, years rather than months.

Another frequently repeated mantra is that Bitcoin is a kind of “new gold.” This is far-fetched, since Bitcoin has been around for only a couple of year whereas gold’s been around for thousands of years. So, Bitcoin’s track record of an alternative asset is nothing to compare with that of gold. We wouldn’t argue that it’s better than gold. More to the point, it’s simply different.

Having said that, it’s still an interesting alternative asset. For starters, because it doesn’t seem to be influenced very much by the stock or bond markets. Bitcoin can appreciate relatively independently of the developments in other markets, which makes it valuable for diversification.

Also, if it turns out that the Bitcoin ecosystem blossoms and this translates into appreciation, a small (!) position in Bitcoin could favorably influence one’s portfolio.

For now, let’s take a look at the charts.

We saw very significant appreciation yesterday on BitStamp. The volume shot up to over BTC55,000. This was the highest level of volume since the violent rebound of Jan. 15 and Bitcoin hit a high of almost $310. At first sight, this was a very strong speculative long signal. But looking deeper, it was possibly more complicated than that. Yesterday we wrote:

Bitcoin went up to above $300 and the volume was also definitely up and relatively significant. Again, this looks like a very bullish development. But there seems to be more to it than just appreciation.

Most notably, Bitcoin has already corrected both on BitStamp and BTC-e from above $300 to around $275. Also, the moves down took place on relatively high volume compared with the moves up. This makes today look like a possible reversal.

At present, our best bet is a reversal and a move back to the possible declining trend line in the proximity of $250. The situation is too unclear to open speculative positions at this time and it looks like there might be more volatility to come. If Bitcoin comes back down below $250, we might bet on the market going down but this is not the case yet.

As a matter of fact, the currency took a dive not only yesterday but also earlier today (this is written around 12:00 p.m. ET), slipping below $250 (solid green line in the chart) and a possible rising trend line (marked in black) at one point. This was a very bearish development since it suggested that Bitcoin might be in for yet another fall.

However, the cryptocurrency has returned to around $260 and above the trend line since then, making the bearish implications somewhat weaker. The volume hasn’t been very weak but at the end of the day it might be lower than yesterday (the day is not over yet, mind).

On the long-term BTC-e chart, the recent breakout above a possible declining trend line is visible. Bitcoin retraced back below this line and below the $250 level (solid green line), but came back above both of them. The move below $250 was a pretty bearish development but the appreciation above this level made the bearish implications a lot weaker.

Currently, the volume levels don’t quite suggest what the next move might be. Our best bet is that Bitcoin might move down again but the fact that the cryptocurrency has held up above $250 suggests a risk of a further move up. The situation in the market is very tense now. We might suggest going short if Bitcoin drops below $250 and this is our best bet. This is not the case just now and a move up is not to be ruled out.

Summing up, the situation is very tense we think it’s best to hold off opening speculative positions.

Trading position (short-term, our opinion): no positions.


Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts at


All essays, research and information found above represent analyses and opinions of Mike McAra and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mike McAra and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. McAra is not a Registered Securities Advisor. By reading Mike McAra’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Mike McAra, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules