For those of you without a minute to spare: we don’t suggest closing longs.
For people considering investing or trading in Bitcoin security remains one of the most important issues before committing oneself to this market. The UK-based GoldMoney Group is adding Bitcoin vault storage to its array of services to potentially resolve security issues, the Independent reported today.
But wait, isn’t Bitcoin digital? Yes, it is, and GoldMoney is aiming to address security threats by storing bitcoins “cold,” i.e. offline. Encrypted bitcoins would be placed in vaults just as gold or silver would. Simon Hamblin the manager of Netagio, the company responsible for encryption, claims:
“It’s one of the safest ways of storing Bitcoin. We encrypt it several times before storing it on devices and store copies in several different locations in the UK.”
Whether this addresses most of the issues of holding bitcoins online remains to be seen, but there might be demand for such services, since GoldMoney's venture already has some competition in the form of Elliptic, another storage company launched last week.
And what’s been going on in the market itself?
On Mt. Gox, bitcoin went up slightly on Friday, to gain more speed on Saturday, to erase the gains on Sunday. Overall, the currency ended the weekend pretty much where it had started it (around $930-960). The volume was moderate to low and no trend crystallized.
Today, the trading has seen bitcoin decline 3.2% from yesterday’s close (this is being written a few minutes past 6:30 a.m. EST). The move has been on moderate volume and fits in well with the action of the last three days.
The recent moves have not been confirmed by significant volume and it seems that what we've been seeing since Jan. 8 amounts to a short-term consolidation. There are no apparent signs of a change in trend, so the outlook remains bullish at this time.
All the action we've seen recently has taken place within two boundaries: the $800 level (our stop-loss level and the dashed red line on the chart above) and the $1,000-1,100 range (solid green line). As we have previously expressed, there seem to be at least two possibilities here. Either bitcoin breaks below $800 or it takes out $1,000. The first option could pave the way for further declines. The latter might see the currency move up significantly up to around $1,200. Another, less interesting from an investor’s point of view, scenario would see further back-and-forth movement between $800 and $1,000.
Right now, we’re leaning toward the second possibility, since the general short-term trend seems to be up. We remain vigilant, just in case the volume explodes with a move down, but we’re keeping our outlined suggested positions intact to participate in a possible bullish spike in volume.
Summing up, the bearish action yesterday and today doesn’t change the general bullish outlook. A move on high volume is what we should be looking for.
Trading position: long, stop-loss at $800. The position is intact to remain exposure to bitcoin in case of a sudden move higher. Any volatile action (either up or down) could be followed by re-adjustments in the position itself or the stop-loss level.
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Regards,
Mike McAra
