Bitcoins Price: Weekly Analysis – April 15th 2015

Market Thoughts

The Bitcoin ecosystem is looking incredibly fragile at the moment. The expectation of many, at the start of 2014, was for this new technological innovation to be a legitimate competitor in global financial markets. There were even predictions of Bitcoins Spot price exceeding $10,000 USD. This theory and reality have not yet aligned, and the current situation is starting to cause some stress in the system.

People that are constantly around the Bitcoin community will appreciate how hard it is for companies to survive in the face of declining capital value. BitPay recently discontinued sponsorship of the Bitcoin Bowl, and several bitcoin websites are unable to maintain their small news divisions. There is also constant talk of miners across the world shutting down, if the price of bitcoins falls any lower, due to a lack in revenue. Those that have been around major changes in established economic sectors know that things will always go up and down, and will probably look the bleakest just before a major sea change.

While the highs of late 2013 seem a distant memory, there have definitely been lots of bright spots in the months since. For starters, a significantly greater number of people have heard of Bitcoin – which is important if we are to expect mass adoption at some point.

We are definitely starting to see more talented people leaving their traditional fields and looking to join the Bitcoin world. And as much as the general public likes to demonize Wall Street – do you really want another Mark Karpeles running a Bitcoin exchange or someone who understands how financial markets function? – Wall Street is taking a keen interest in the industry.

While it is still hard to convince your friends and family to buy into bitcoins, as the price continues to fall, when they finally do – the infrastructure will actually be there to support a price of over $1,000 a coin, this time.

Everyone just needs to step back, look at the ecosystem objectively and then take it one step at a time, no matter where it leads.

Market Outlook

Coming from an analytical background, with experience in trading, there is nothing wrong in saying that the price of bitcoin can tell us all we need to know about its health. Let’s take a look at what the charts are telling us.

There have been several large patterns over the last year and a half. While the last two looked like promising bullish channels, they have both broken down violently. Another significant thing to notice is that each sharp rise, and subsequent sharp fall, preceded a very rapid counter move. While most of these moves did not last, we have to keep in mind that the fall over the last few weeks did not have such a sharp retrace. This is perhaps an indication that we have not yet hit a bottom.

Nothing should ever be expected to move in a straight line, and even though the large arrow target in suggesting we can see a move down to double digits, it is certainly not written in stone. For now let’s just focus on the shorter term, and keep an eye out for double bottom support in the $160’s and the round number of $200.

Looking at the same chart, but a little more closely, we can start to add a little color using some additional tools like Moving Averages and Momentum Indicators. The 50-Day Simple Moving Average (SMA) has clearly been significant, and when the price failed to break above it a week ago, down we went.

At the moment some of the indicators are starting to get into oversold levels, so a bounce is the most likely scenario – either here or a little lower in the $200-210 range. All indications suggest that this would be just another counter trend rally. Since we are looking at daily charts, projecting more than a few weeks out is not prudent at this stage.

Final Thoughts

The technical trading side of the market is currently reflecting the general mood of the landscape, but the price of bitcoins will probably always be the best barometer for the ecosystems success, or failure. The one major positive to keep in mind is that once a person starts to use bitcoins in their daily life, they will likely be hooked for life, as the current financial system just can’t compare. Some will take a break while the price is down, but they will be back – and that is a major positive to always keep in mind when thinking about the future potential of mass adoption.

This article was completed on Tuesday April 14 11:00 pm ET, when BraveNewCoins Index showed Bitcoin price at $222 USD. Tone Vays will be a speaker at the upcoming NYC Inside Bitcoins Conference April 27-29 and also at the Inside Bitcoins Hong Kong Conference May 14-15

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.