Has The Tide Turned For Bitcoin Prices?
Ben Myers | Aug 25, 2014 03:14PM ET
After a volatile environment last week, the Bitcoin (BTC-eUSD) price stabilized above $500 over the weekend, briefly dipping below $500 a few times. What is the outlook for today? Monday has kicked off with small selling volumes and little price action. With mostly positive news in the past few days, the fundamental outlook is slightly positive.
A gold and silver bullion dealer, Agaro Commodities, has been accepting Bitcoin since the end of 2012. Since then, the company has generated $10 million in revenue from Bitcoin payments, which has led to company to halt credit card payments. The CEO of Agaro commodities stated that the preference of Bitcoin over credit card payments reduces transactions costs and reduced the risk of fraud. Interest amongAgaro’s customer base and broader enthusiasm of Bitcoin in the precious metals investment community were also key reasons for the move away from credit card payments. The company is planning to develop a digital currency exchange, allowing customers to trade precious metal for Bitcoin. This development mirrors the recent decision by Amagi Metals to halt all fiat payments. If the pace increases among precious metals dealer to accept Bitcoin, the complementary relationship between Bitcoin and gold/silver will continue to grow, solidifying Bitcoin as long-term and stable investment.
The CEO of the Electronic Transactions Association (ETA), which represents companies such as PayPal, Amazon and MasterCard, has indicated that members of the ETA are starting to recognize Bitcoin’s potential. This could imply that more partnerships may be forged between traditional electronic payment providers and Bitcoin start-ups. The future choice of ETA regarding collaboration with Bitcoin start-ups depends on consumer demand, which is likely to increase as consumers realize Bitcoin is a cost efficient and convenient way to store and transfer money.
The chart below shows the hourly chart for the BTC-USD exchange rate from the BitStamp exchange. The price action has moved above the 50-day moving average (MA). Using the moving averages, the trade that is suggested is to buy, as the 100-day MA will act as resistance at $509.47 level. The moving averages indicate bearish momentum, as the 100-day MA is above the 50-day MA. The parabolic stop and reversal indicated the start of a downward trend at the very beginning of Monday, but the dots are now very close to the price action and we could see a reversal, indicating the start of a new, upward trend. The stochastic is rising and approaching the overbought zone, indicating that the price is likely to rise further today and that there is significant buying activity taking place.
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Looking at the 4-hour time frame using the Ichimoku cloud indicator, the price action has been contained by the cloud for the whole of today so far. The base line is currently at $508.50 and a move above this price would indicate bullish momentum. The cloud has turned from red to green, indicating an upward trend within the current downward trend could be forming. The cloud indicates the resistance level to be at $501 and the support level being $496 for the next 12 hours.
Examining the Ichimoku cloud for the hourly chart, shown below, we can see that the price is very close to crossing over the base line. At the present the price is slightly above the base line, indicating bullish momentum. The cloud has also changed from red to green, indicating the start of a possible uptrend today. $503.70 will act as support later tonight and $507.50 will act as resistance. A move above the current resistance at $507.50 will see the price action move out of the cloud and would confirm the start of an upward trend.
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