At half time during a BBQ for last weekend’s Australia vs England Rugby World Cup Quarter Final, the topic of conversation turned to Bitcoin and about possible catalysts for a revival in price.
One of my buddies who works in the real estate industry and by virtue enjoys all things market related was confident that the next leg higher in Bitcoin would be a result of the scheduled 2020 halving of Bitcoin. The halving refers to a reduction in the reward that miners received for creating new bitcoin bocks from 12.5 Bitcoin to 6.25 Bitcoin thereby reducing the supply of new Bitcoin coming into the market by half.
I argued that the halving event was already well known to the market and the upcoming reduction in supply should mostly be baked into the price of Bitcoin. After canvassing a few other possibilities our attention returned to the game.
Of course, the other possibilities discussed did not extend to Chinese President Xi Jinping making comments just a few days later that China should “seize the opportunity” of blockchain technology. After previously banning exchanges and cryptocurrencies President Xi’s comment put pressure on other leaders to either embrace or ban the blockchain technology which underpins Bitcoin.
In the lead up to President Xi’s comments, there was some reasons to expect Bitcoin should hold the support ahead of $7k, which included the 61.8% Fibonacci retracement of the rally from the December $3.1k low up to $13.8k high of June, including a 5 wave decline and bullish divergence via the RSI indicator.
Technically, the weekends break and close above the trend channel resistance and the 200 days moving average at $8.9k goes a long way towards confirming Bitcoin put in tradable Wave IV low at last week’s 7293 low. We favour opening longs in Bitcoin on dips back towards $9.2k with stops placed below $7.2k. The target for the trade is a move to the $15/16k area.
Source Tradingview. The figures stated areas of the 28th of October 2019. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
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