Bitcoin Price Analysis: Week of June 10

Market Thoughts

Perhaps it’s a good time to talk about the general economic landscape, the latest news on Greece as it relates to the faith of Europe and of course, how Bitcoin fits into this macro space.

The latest news had the equity markets putting in an unbelievable day, single handedly reversing two weeks of market weakness.

“The chairman of eurozone finance ministers said a cash-for-reform deal with Athens was still possible in time for their June 18 meeting, with just a few issues remaining to be solved, but Greek counter-proposals were not yet satisfactory. A Bloomberg report said the German government may settle for a clear commitment by Greece to at least one reform measure in order to unlock aid. “ – accreditation

Two days earlier however, it was reported that:

“Greece’s international creditors last week proposed extending the country’s bailout until the end of March 2016 in return for pension cuts, tax increases and other policy steps by Athens”

Ignoring the meaningless language of “other policy steps,” it looks like the Greek government will have to make a choice, will they cut pensions or raise taxes. As has been the case throughout Europe in the last 5 years, since the initial Greece debt problems began in 2010, they will probably make the most detrimental choice for the longer-term future of the country and raise taxes. In this case however, the wording of longer-term is used rather loosely because everything they do now to take away wealth from its citizens is significantly magnified.

While the option to cut pensions in any southern European state could lead to mass riots in the streets and a very sudden regime change, raising taxes would only exasperate a situation where official unemployment is at 25% and youth unemployment around 50%.

The biggest problem with socialist governments like Europe, and more recently the United States, is that Governments only take and waste wealth – with very little benefit to the citizens. Greece is taking this to another level. Everyone knows that anything they take will be going to pay off debts incurred long ago, which hardly provided any benefits to the population at the time. There is absolutely no way out of this debt trap. Sometime later this year, or at the latest 2016, Greece will default and other European nations along with their major banks will begin to implode in a domino effect.

So what is the Eurozone doing to prevent this disaster? At the very least the leaders should be smart enough to realize that the debt will implode on their watch, so their goal is to prevent a mass panic. The primary thing on the agenda is to eliminate cash, for two main reasons. One is that it would eliminate the possibility of a bank run, as there would be no cash to stand in line for. Secondly it would put pressure on the black markets and allow the government to implement any price controls they like, whether it’s a VAT or a price freeze on goods or service. France is already leading the charge with recent headlines restricting any purchases of 1,000 Euros in cash. For the latest information in this movement, please keep an eye on Martin Armstrong’s Blog.

So what are some of the solutions to a world of higher taxes, less freedoms and any cash transaction having a default stigma of a criminal act? Most think Gold and Silver will be the saviors in the next financial crisis but there is a big problem with the metals. Current technology allows governments to easily confiscate the metals during any attempt by citizens to move their wealth out of a country. It should also be clear that in today’s world of instant transactions using Gold or Silver is completely impractical. As trust deteriorates during another crisis, having someone else hold the metals on your behalf would also be problematic.

Bitcoin could be a potential solution to this nightmarish scenario. Being a trustless system with the ability to move any amounts instantly, it is the perfect conduit for those in Greece or other parts of Europe to move whatever wealth they may still have before their Governments come to steal and waste the rest of it.

Of course the Bitcoin network is still very new, volatile and needs a lot more confidence for mass adoption or even regional adoption as described above. The potential is already there for it to be a solution. Don’t expect too many Greeks to take this advice, but perhaps the Spanish or Italians will take the idea more seriously once Greece defaults.

Market Outlook

Let’s take a look at the technical picture though almost nothing has changed from last week.

The Symmetric Triangle that broke down last week pulled back up and is now sitting at the point of the breakdown $230. This is typical in breakdowns or breakouts as not all targets are immediately realized. Lots of patience is needed in trading. The breakdown however is not clear-cut, as the initial fall did not even breach a recent low of around $213. Unless we see lows under the lowest price reached during the formation of this triangle, we will be very cautious in calling it an official pattern breakdown even though the odds are still in that favor.

As usual, a detailed chart is more interesting and here we can clearly see that the 50-day Simple Moving Average has flattened out, which is usually a good sign, but the price has been consistently closing under it, which is bad. We are also on the verge of completing another box of low volatility. All the boxes on the chart are the same length and in most prior cases, things tend to get interesting at the end of these 10-day spans. The 200-day Simple Moving Average continues to decline and is almost on top of the $255 horizontal resistance line that has been in place since the start of the year. There are still few positives to take away from this chart. All talks of bullish momentum cannot begin until we start seeing higher highs and higher lows along with breaking through the Moving Average resistance.

Final Thoughts

During times of low volatility it is natural for traders and investors to get frustrated, or to forget they even have positions. The markets have a way of moving when you least expect them to. Always be diligent and don’t forget, the only bitcoins that are truly yours are the ones where only you know the private key. Only invest what you are willing to lose, as bitcoins might just be the last safe asset around when the next financial crisis hits.

This article was completed on Wednesday June 10 8:00 pm ET, when BraveNewCoins Index showed Bitcoin price at $229 USD. Tone Vays will be a speaker at the upcoming Inside Bitcoins Chicago Conference July 10-11.

Disclaimer: The price projections above are just the opinions of one trader. It is meant as a guide, or fresh look, to supplement the reader’s personal views on bitcoin. Trading in general (but especially Bitcoin) is incredibly risky and should only be done with capital one can afford to lose. The Author is a trader and does take on small position in the manner suggested in the article.