Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17
7 Signs You Should Add Gold To Your Portfolio Now - 19th Jun 17
US Bonds and Related Market Indicators - 19th Jun 17
Wireless Wars: The Billion Dollar Tech Boom No One Is Talking About - 19th Jun 17
Amey Playing Cat and Mouse Game with Sheffield Residents and Tree Campaigners - 19th Jun 17
Positive Stock Market Expectations, But Will Uptrend Continue? - 19th Jun 17
Gold Proprietary Cycle Indicator Remains Down - 19th Jun 17
Stock Market Higher Highs Still Likely - 18th Jun 17
The US Government Clamps Down on Ability of Americans To Purchase Bitcoin - 18th Jun 17
NDX/NAZ Continue downward pressure on the US Stock Market - 18th Jun 17
Return of the Gold Bear? - 18th Jun 17
Are Sheffield's High Rise Tower Blocks Safe? Grenfell Cladding Fire Disaster! - 18th Jun 17
Globalist Takeover Of The Internet Moves Into Overdrive - 17th Jun 17
Crazy Charging Stocks Bull Market Random Thoughts - 17th Jun 17
Reflation, Deflation and Gold - 17th Jun 17
Here’s The Case For An Upside Risk In The Global Economy - 17th Jun 17
Gold Bullish on Fed Interest Rate Hike - 16th Jun 17
Drones Upending Business Models and Reshaping Industry Landscapes - 16th Jun 17
Grenfell Tower Cladding Fire Disaster, 4,000 Ticking Time Bombs, Sheffield Council Flats Panic! - 16th Jun 17
Heating Oil Bottom Is In.(probably) - 16th Jun 17
Here’s the Investing Reason Active Funds Can’t Beat Passive Funds—and It Worries Me a Lot - 16th Jun 17
Is There Gold “Hype” and is Gold an Emotional Trade? - 16th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Bitcoin Trading Alert: $400 Level Becoming More Important

Currencies / Bitcoin Mar 22, 2016 - 06:42 PM GMT

By: Mike_McAra

Currencies

In short: short speculative positions, target at $153, stop-loss at $515

It has been known for some time that Bitcoin transactions are not really anonymous. Now, a company focused on Blockchain surveillance has received significant venture capital funding, we read on The Telegraph website:

A British technology company that attempts to fight crime by spotting suspicious Bitcoin deals has raised $5m (£3.5m) as banks and regulators begin to take the blockchain technology that backs up the virtual currency seriously.


London-based Elliptic claims to help solve one of the biggest challenges of Bitcoin for companies that use it - the inherent anonymity, which means banks are reluctant to embrace it for fear of falling foul of anti-money laundering regulation.

(...)

Dr James Smith, one of Elliptic's three co-founders, said its software, which uses artificial intelligence to scan the Bitcoin network, makes it easier to identify patterns of suspicious behaviour and trace it back to the source. It is already widely used by online exchanges and law enforcement to detect potential money laundering, and has processed around $2bn in Bitcoin transactions.

(...)

Paladin Capital, a US-based investor with close connections to the US government, led the investment. Kenneth Minihan, a former director of the US National Security Agency who is now a managing director at Paladin, said: "Elliptic is a game-changer for blockchain and is already trusted by some of the smartest minds in law enforcement and compliance. The firm's monitoring capability will be an essential component of any blockchain in the future and we will help Elliptic to expand in the US, via our contacts and knowledge of US law enforcement and government agencies."

Bitcoin has never really been anonymous, to start with. Actually, the fact that all transactions are recorded in a public ledger seems to make Bitcoin surveillance not so big a problem. This is not the first time we actually hear about the possibility to analyze various transactions but it might be the first highly-publicized professional attempt to tackle the subject.

The way Bitcoin is set up makes it relatively easy to track transactions but not necessarily easy to discover who is behind them, at least not always. Elliptic seems to be focused on discovering patterns in the Bitcoin data which could identify potentially fraudulent transactions. We'll still have to see whether this evolves into an AML system. For the time being, it seems that financial institutions are very much interested in the possibility to have tools identifying potentially suspicious transactions. This could make Bitcoin-based systems more attractive to them, ceteris paribus.

For now, let's focus on the charts.

Bitcoin Chart

On BitStamp, we have a situation where Bitcoin hasn't really moved very much in a couple of weeks. This doesn't mean that the current situation is boring, in our opinion. The mere fact that Bitcoin hasn't moved recently is by no means a guarantee that it won't move in the future.

Since Bitcoin hasn't moved much, our previous comments are still up to date:

(...) Yes, we saw a failed breakdown below $400 but it doesn't necessarily have any meaningful implications for the next significant move in the market. Bitcoin might go up some based on the bounce back above $400 but the implications are weak and of very short-term nature. The most important part still is the fact that we're below a possible long-term declining resistance line.

(...)

Additionally, we now see that the late-February local top in Bitcoin is lower than the January and December tops, not to mention the November spike. A series of potentially lower highs might be a bearish indication.

The recent lack of action and the fact that Bitcoin remains below the possible long-term declining resistance line are indications that the previous trend remains unchanged - down.

The mere fact that Bitcoin hasn't moved might lull some traders into thinking that volatility has died down. This might not be the case. There were periods in the past when declines took some time to unfold. In any case, we wouldn't bet on Bitcoin staying in place.

Bitcoin Chart 2

On the long-term BTC-e chart, we don't see much action, in spite of the recent problems with BTC-e withdrawals. We actually still think that anybody considering depositing funds with BTC-e should check that the situation is now resolved.

Bitcoin remains relatively flat above $400 and this means that there haven't been serious changes in the outlook. Recall our previous comments:

For the time being, it seems that we still have important resistance lines $450-470, so the situation doesn't really seem bullish. (...) Combining this with the bearish indications still results in a bearish indication, particularly given the recent rally. It seems that Bitcoin might be ready for more declines (in our opinion).

Even if we were to see the recent months as a head-and-shoulders formation (which itself might be debatable), it would seem that we are now after the second shoulder. This would itself be a bearish indication for the next couple of weeks.

Right now it seems that Bitcoin has a lot of downside potential ($350 being the first possible pause for a potential decline) while at the same time not displaying much upside potential. If we see a slip below $400, the decline might accelerate.

(...) What is more, if you take a look at the RSI, it's around 50, implying that there still might be room for Bitcoin to decline. As mentioned in our previous comments, there seems to be a lot of downside potential for Bitcoin with not much upside potential. Combine that with a series of lower highs, a lack of breakout above a possible long-term declining resistance line and the recent low volume of the moves up, and the situation still looks very much bearish.

Actually, Bitcoin has been trading above $400 for some time now. Does this mean that a move up will follow? It might, there are no sure bets in any market but our assessment is that depreciation might actually be the next part of the move. The fact that the $400 level has not been taken out in the last two weeks suggests that the next move below $400 might be a more violent one.

Summing up, in our opinion speculative short positions might be the way to go now.

Trading position (short-term, our opinion): short speculative positions, target at $153, stop-loss at $515.

Regards,

Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts at SunshineProfits.com

Disclaimer

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.

Mike McAra Archive

© 2005-2017 http://www.MarketOracle.co.uk - 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

Catching a Falling Financial Knife