Bitcoin Lower As Banks Close Their Doors
Ben Myers | Oct 30, 2014 11:13AM ET
The (Bitcoin) price according to the BitStamp exchange broke through four daily support levels yesterday as the end of quantitative easing in the US boosted global confidence and saw huge moves into the US Dollar. The price fell from around $350 to $336.03 at present. Going forward strong support should be found at the $322 level, which is the 76.4% Fibonacci retracement level from the high in the winter of 2013. Daily support will be found at just above this retracement level, at $327.36 and further support at $319.01, while daily resistance will be encountered at $350.02.
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Two major Norwegian banks publicly announced Thursday that they will no longer service Bitcoin companies or businesses that operate with digital currencies. This has caused the Norwegian Bitcoin exchange, Justcoin, to close their doors to consumers. Last year the Norwegian Tax Administration stated that Bitcoin losses could be deducted from tax payments and tax should be paid on Bitcoin profits. However, this new development in Norway will hamper adoption and resistance from the banking sector illustrates the threat that Bitcoin poses to the current order of the financial sector.
A new study from the US suggest the consumer and businesses remain apprehensive in regard to using digital currencies. Software Advice, a software research firm, surveyed 400 small business owners and customers who answered a series of questions regarded their willingness to use digital currencies. 49% of consumers indicated that were not likely at all to use digital currencies while 50% of business owners surveyed stated that their companies are not equipped to handle digital currency usage. On the other hand, 19% of business owners said that they had taken steps to accept digital currencies. The report does note that the emerging business to business ecosystem for digital currencies is a positive sign for US companies.
The daily chart below shows that the price closed below the base line yesterday. This is the first time the price has been trading below the base line at the daily timeframe since the beginning of October. This indicate bearish momentum and we should see the price trend lower, since the price action is below the Ichimoku cloud as well. The cloud will act as resistance at the $350-$355 level. If the price moves above the base line at $346.50, this will signal bullish momentum and should see the price move towards the lower part of the cloud.
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At the 2-hour timeframe, the MACD seems to be signalling an upward move, as an upward cross looks imminent. If the MACD displays an upward cross and the histograms from the MACD start increasing, then this will indicate gains will be made further ahead. However, the relative strength index is still below 50, indicating a downward trend. At present, the relative strength index is at 35, indicating a downward trend but does not signal oversold conditions in the market just yet.
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