Bitcoin Gaps Lower On SegWit2x Cancellation
IronFX | Nov 14, 2017 10:03AM ET
Bitcoin prices traded lower on Friday, and opened with a negative gap this week, following the cancellation of the much-anticipated SegWit2x hard fork. The tumble in prices was likely a reflection of market disappointment, as many investors may have purchased bitcoins ahead of the fork in order to receive the free new coins that the fork would have delivered, if implemented. The hard fork would have divided bitcoin into two coins, giving the holders of the original bitcoins extra new coins for “free”, as was the case with Bitcoin Cash and Bitcoin Gold.
Although bitcoin prices could continue correcting lower in the near-term on this negative sentiment as speculative investors rebalance their portfolios and reduce their exposure, we are not ready to turn bearish on the cryptocurrency overall. Indeed, the fact that there has been no hard fork may even prove positive for prices over time, as the fork would have created a competing version of bitcoin, which could have taken some demand out of the original instrument. In addition, there are other factors that could support bitcoin over time, such as the increased legitimacy it is slowly but surely obtaining, evident by the CME Group’s upcoming launch of a bitcoin futures exchange.
Bitcoin opened with a large negative gap on Monday, to trade fractionally below the 5700 (S2) barrier. Nevertheless, the cryptocurrency was quick to recover, close the gap, and hit resistance at 6660 (R1). Subsequently it retreated again. The price is trading below the downside resistance line taken from the peak of the 8th of November, and also below the prior uptrend line drawn from the low of the 15th of September. As such, we see the likelihood for the bears to take charge again in the short run and push the price down for another test near 6090 (S1). A clear dip below that support is possible to open the way for our next hurdle of 5700 (S2).
Zooming out to the daily chart, we still see a price structure of higher peaks and higher troughs. Although bitcoin has broken below the aforementioned uptrend line drawn from the low of the 15th of September, it continues to trade above other, longer-term uptrend lines, like the one drawn from the low of the 17th of July and the one taken from the lows of March. As such, we still see a positive long-term picture and we would treat the latest slide or any near-term extensions of it as a corrective phase in the context of the broader uptrend.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.