Will Bitcoin Continue The Slide Despite Positive Data?
Ben Myers | Sep 02, 2014 08:55AM ET
After breaking through the $500 mark in the downward direction, the Bitcoin (BTC-eUSD) price stumbled to the $470 and is just bouncing back. Bitcoin has made a 1.03% gain in the past 24 hours. It seems as the downward trend that started in July is going to continue in the first week of August. Nevertheless, more positive fundamental news today for Bitcoin enhances the long-term outlook. For example, a report from the Canadian press shows that a small, but growing, number of workers are demanding to be paid in Bitcoin, instead of Canadian Dollars. However, one analyst suggests that payrolls in virtual currencies will not expand beyond the technology sector as there are limited places to spend these currencies.
A Cambridge graduate is planning to protect Bitcoin users from hackers and virtual attacks by building a ‘virtual vault’. Bitcoins will be stored as coded keys in bank vaults across the UK, offline and out of reach of hackers. Furthermore, students at Switzerland’s largest university, the University of Zurich, are testing an open source software that allows Bitcoins to be used as payments in the cafeteria, for example. The touchless bitcoin payments system is known as CoinBlesk. The resulting product aims to provide an easier point of sale experience for both merchants and consumers.
Also, a recent US survey found that 43% of respondents aged 18-24 are likely to purchase Bitcoin, whereas only 5% of those older than 55 gave the same answer. Regulation seems to be a key issue among the public, who seem to perceive Bitcoin as risky. Insurance and security were found to be important factors that would affect adoption. In related news, 5 US states are implementing Bitcoin friendly regulation. The states are Texas, New Hampshire, New Mexico, California and Colorado. In contrast to New York, some of these state’s regulation could be more enticing to the Bitcoin ecosystem.
Mozilla recently launched a $33 smart phone in the Asian market and this has led to faster adoption of Bitcoin in India. The phone is called the IntexCloud FX and could be the best catalyst for Bitcoin adoption in the developing world. Mozilla wants to expand into Russia and Africa before the end of 2014 and has two Bitcoin wallets available on the Firefox marketplace. The number of Bitcoin apps is expected to grow as Mozilla sells more and more phones in developing countries.
The chart below shows the hourly chart for the Bitcoin price, according to the Bitstamp exchange. The Ichimoku Kinko Hyo indicator is also shown. The conversion line crossed the base line in the downward direction late at night yesterday, which indicates bearish momentum. The price action has remained subdued below the cloud, indicating a downward trend. The price action is also below the base line, which also confirms bearish momentum. If the price reaches and exceeds $480.21, the momentum will be reversed to bullish and we could see more gains. The cloud will act as resistance for the next 24 hours at the $482 level today and $478 level tomorrow.
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The Bitcoin price seems to have broken out of the descending triangle candlestick pattern, which is confirmation of the resumption of the downward trend. Support for today could be found at $461.07 and $442.06, whereas resistance for today will lie at $492.01. If a trend reversal occurs, further resistance will be found at $510.83, however, the price action is likely to remain below the psychological $500 level and trade in the $480-$460 range.
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