Bitcoin Trading Alert originally sent to subscribers on March 24, 2015,
11:57 AM.
In short: speculative short positions, stop-loss at 283,
take-profit at $153.
Nasdaq is going to provide a new Bitcoin exchange with technology allowing
its future users to trade Bitcoin, we read on the Wall Street Journal website:
Nasdaq OMX Group Inc. has agreed to provide New York-based startup Noble
Markets with core technology to power a new marketplace aimed at allowing
companies and institutional investors such as hedge funds to trade bitcoin
and related digital-currency assets.
According to a joint statement provided to The Wall Street Journal,
Noble’s platform will use Nasdaq’s X-stream trading system, a high-tech
system for matching market participants’ orders that is used by more than 30
exchanges and marketplaces worldwide. Nasdaq will also provide marketing
support.
The agreement follows other Wall Street initiatives that could pave the
way for financial institutions to own and trade digital currencies, which
fans say have the potential to make the global financial system more
efficient but which have also been marred by price fluctuations, investment
scams and cybersecurity concerns.
This is most probably part of a broader process in which financial
institutions such as banks or exchanges will step into the Bitcoin space.
Here, Nasdaq isn’t actually setting up its own Bitcoin shop but is instead
providing a startup with the necessary technology. The startup will use this
technology to enable Bitcoin to be traded just as stocks are. This might not
seem very different from the exchanges we already have but the idea here
might be that an exchange set up using already tried and tested tools might
be attractive to the kinds of institutions which have so far mostly stayed
away from Bitcoin, such as investment funds, hedge funds, but also individual
investors which are accustomed to trading stocks but are not necessarily
familiar with Bitcoin wallets.
It will be interesting to see how this exchange will compete with other
initiatives currently underway, such as the upcoming Gemini exchange. We’ll
probably see more activity in the Bitcoin exchange space in the months and
years to come. The rise in numbers of regulated Bitcoin exchanges seems to be
the trend now. The outcome Bitcoin users might hope to is an increase in the
transparence of the Bitcoin market and a possible rise the popularity of
Bitcoin among individuals and institutions.
For now, let’s focus on the charts.
On BitStamp, we didn’t see much action yesterday. The volume was up but it
wasn’t really strong. If you recall the comments from our yesterday’s alert:
(…) we saw a relatively muted move up over the weekend. Bitcoin partially
reversed course and erased some of last Wednesday’s losses. Is this a bullish
move? Not necessarily. The volume over the weekend was not really strong.
From Friday to Sunday we didn’t really see volume levels like the ones that
came about on Wednesday and Thursday. As such, the very recent appreciation
doesn’t look like a very strong move to the upside. One reason to be cautious
here is that Bitcoin didn’t move below $250 (green line in the chart). But
most of the other hints (volume, price action, possible breakdown below a
rising trend line) point to more depreciation.
Today (…), we’ve seen more of the same, meaning not much action and
Bitcoin above $250. The fact that we haven’t really seen a surge suggests
that what we’re seeing now might just be a short counter-trend move up. It
seems that we might see a move below $250 and an acceleration of the decline
in the days and weeks to come.
Today, we’ve seen a stronger move down, very much in line with the outlook
outlined in our last alert (this is written around 11:00 a.m. ET). The volume
is already up and this might very well be the move down we’ve been waiting
for some time now (today’s move is not yet visible on the above chart). What
might be important, Bitcoin is now below $250. The outlook has definitely
deteriorated compared with yesterday. Mind that it was already bearish then,
and it has now become even more bearish. If Bitcoin stays below $250 today,
we will have an even more bearish outcome and we might see a move down to
$200, perhaps not an immediate one but the possibility would be there. $250
is very much the level to observe now.
On the long-term
BTC-e chart, we see that Bitcoin is still below the possible rising trend
line. Yesterday, we commented on this situation in the following way:
(…) we see a more bearish picture in that Bitcoin has stayed below a
possible rising trend line. The currency is now below this line but above
$250. It seems that any strong move now might trigger a more sizeable decline
or rally. The fact that we’ve seen more of a slowdown in the last couple of
days, that the most violent action recently was to the downside and that
we’ve already seen a possible lower local top just before the decline suggest
that the momentum might actually be building up in favor of a move lower.
At the moment, it seems that $250 might be a level at which market players
would decide to open short orders or close their positions. Our take is that
in the current environment a move below this level could herald yet another
decline. The short-term outlook seems bearish.
Today, we have seen a further deterioration of the short-term outlook. The
move down below $250 (not yet seen on the above chart), if confirmed, could
open up Bitcoin to a more pronounced decline, even in the medium term. Our
tentative target for the move would be around $200 (dashed red line in the
chart), but a move even lower could be in the card. This is why we have the
take-profit level at $153.
The RSI Index is still not in the oversold territory, which might be a
hint that there’s still room for declines. If Bitcoin stays below $250, the
outlook would deteriorate further. This might be a critical time for Bitcoin
traders since a lot might happen in the next couple of days.
Even if the move below $250 is prolonged, Bitcoin won’t have to decline
right away. Instead, we might see a smoother decline, much like we saw after
the May 2014 rally. Alternatively, the decline might speed up in the next
couple of days. One way or another, it is our opinion that the short-term
outlook is now bearish.
Summing up, in our opinion speculative short positions
might be the way to go now.
Trading position (short-term, our opinion): short,
stop-loss at 283, take-profit at $153.
Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
Bitcoin
Trading Alerts
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