Detailed Analysis of Bitcoin (BTCUSD)


Bitcoin – from highs to lows

Bitcoin hit all time highs around 19500 during December 2017. This was also the start of the Crypto sell-off – price has seen downside pressure since December 2017 to date. Could now be a good opportunity to buy bitcoin and re-invest in the once high return market? Are the days of continuous highs now over? Does bitcoin have a future?

Technical Analysis

Let’s have a detailed look at the charts and see what price action and indicators suggest…

The Weekly time-frame (above) shows the market price history of bitcoin from it’s beginnings to date. You can see the all-time highs during December 2017 and it’s steady decline since.

Price has moved below all key Fib levels, suggesting that the current downside pressure is not a correction or retrace move but that bitcoin has entered a bearish market. Bitcoin recently bounced off 100 SMA and the moving averages continue to be bullish and are widening, all signalling that price could start moving higher.

Buying opportunities may exist around the 100 SMA. If this breaks, buying opportunities may exist around the horizontal level at 3286 and 1100. A bullish move could be rejected or reverse around the horizontal levels at 6077 and 8190 and around the shorter-term moving average.

The daily time-frame (above) shows a clear down-trend – price action has formed a series of lower swing lows and lower swing highs and the moving averages are bearish and widening. There is nothing to suggest that the downside momentum is weakening.

If bitcoin can swing above the moving averages and the trend resistance area, price may reverse some of the recent downtrend and start up-trending.

Long opportunities could exist around the trend resistance (when it acts as support) and around bullish moving averages. A bullish move will face a lot of resistance – horizontal levels at 5775, 6110, 8353, 9694 and 11679.

The 4 hour time-frame (above) shows recent upside and a clear uptrend. The moving averages are bullish and steady – confirming the bullish momentum.

Opportunities to go long may exist around the trend support area, around the dynamic support of the moving averages and around the identified horizontal levels at 4053, 4006, 3896, 3781 and 3643. A bullish move could stall or reverse around the horizontal resistance levels at 4159 and 4326.

Fundamental Analysis

Well, what can we say?! Bitcoin remains one of the most controversial markets with strong opinions for and against it’s future. There are 3 things that are currently clear though…

  1. Demand for bitcoin and other crypto currencies is not increasing, hence the current stagnant markets
  2. Upcoming generations prefer software to hardware, i.e virtual currencies to traditional commodity currencies like GOLD. Most under 30’s would prefer bitcoins than GOLD. We could see demand for bitcoin grow in coming years.
  3. There is still no major need for bitcoin. Almost all people can live their life’s without the need to ever own a crypto currency, unlike traditional currencies. Until this changes, bitcoin will remain a speculators market.

Summary

Bitcoin continues to be a high-risk investment due to the amount of uncertainty about it’s future. The charts clearly showing buying opportunities though and bullish price action levels and support are being respected.

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