In short: speculative long positions, target at $19,500, stop-loss at $8,600.
Without much change from price, the situation in Bitcoin is still one where we are not far from important developments. In particular, one level seems interesting.
The Winklevoss twins hit the news again with their comments on Bitcoin. In an article on the Forbes website, we:
"Unlike the internet, which you couldn’t buy a piece of, you can actually buy a piece of this new internet of money," Tyler and Cameron Winklevoss told CNN.
"It’s still a retail-driven market, from day one. And a lot of people have done really well. Wall Street has been asleep at the wheel," the twins warned.
On thing that seems to be right is that it is a retail-driven market. Large institutional investors are mostly absent from the Bitcoin market. The price fluctuations are usually a result of the activity of individual investors. Wall Street hasn’t really entered the market as it is simply too small and volatile, with too little regulations for the taste of the large institutions. The idea that everybody can buy a piece of the “new money” is interesting but it hinges on the assumption that Bitcoin will remain dominant in the digital currency space. And if we have learned something about new technologies, it’s that things can change quite rapidly (think Myspace and Facebook). Currently, however, Bitcoin is actually the dominant force in the digital currency market, so a bet on the currency could make some sense, in our opinion. The key thing is to remember not to put too much capital into the currency. We can’t really comment on any specific investor, as certified financial advisers should do that, but a general idea might be not to keep more in digital currencies that one is absolutely willing to lose, e.g. no more than 5% of their overall portfolio. Again, this is not investment advice and you should be aware of the risks associated with Bitcoin and potentially consult a certified investment adviser.
In the Middle
On theBitStamp chart, we haven’t seen a continuation of the depreciation.
The most visible development is the rebound from the 2.618extension. This stopped the move to the upside. And it was not the first time this happened. Bitcoin went up above this level twice before the most recent time, but it rebounded to the downside on both occasions. So, altogether, this level was in play three times in the recent past, and this makes this level potentially more important in the future. Right now, Bitcoin is smack in the middle of the distance between the 1.618 and 2.618 extension levels. Since there has been no important change in the short-term outlook, it remains bullish.
On theBitfinex chart, we see similar developments to what we saw from the short-term perspective.
The long-term chart shows that Bitcoin is between two potentially important levels – the 50% and 61.8% Fibonacci retracements. So, although the specific levels are different, the situation is actually relatively similar to what we saw on the short-term chart. So, what level can we currently observe for signs that the situation is changing? The most important level seems to be $12,000. It is at this point that Bitcoin can test the move to the upside and afterwards we have $13,000, which could serve as a confirmation that the move up is actually going full steam ahead. On the other hand, levels around $9,000 and below could be a sign that the situation is becoming more bearish. We haven’t seen either of these developments just yet.
Summing up, in our opinion long speculative positions might be favorable at the moment. $12,000 is still the main level of interest.
Trading position (short-term, our opinion): long positions, target at $19,500, stop-loss at $8,600.
Bitcoin Trading Strategist