Back to back gains, Bitcoin closes above $3500
Bitcoin has maintained the bullish momentum and pressure from Monday’s trade. After coming off of the largest percentage gain in over 7 months, there were concerns about the move being faded. There was a flag pattern that formed during yesterday’s session and traders did push price above that flag – but price halted near Monday’s high at 3585 where it retraced and traded sideways. In the last hour of the daily candlestick, massive volume stepped in an pumped Bitcoin to the close at 3668, a +4.87% gain for the day.
Short term resistance or a path higher
The outermost arc of the current square continues to be a tough nut to crack. Both of the most recent swing highs have been at a place where price has gotten to close to that arc. These arcs act as very resistive or supportive zones. Think of them as a shield in Star Trek or Star Wars. In other words – price likes to move away from the arcs, it doesn’t want to stick around the arc for long. It is very possible that we get what I call a trending squeeze, this occurs when price follows the contour of the arc for a prolonged period before experiencing a sudden breakout in the direction of that trend. The only two types of uptrend scenarios I see happening at this level are a significant drive higher up and through the arc or a steady rise where price hugs the outer arc before experiencing a big breakout.
Sentiment continues to wear on market
There continues to be negative sentiment in the broader cryptocurrency market. JPMorgan reported that the length both the amount of time and the amount of movement lower that Bitcoin has experienced for the entirety of 2018 has scared off institutional investors and speculators. However, not all major players are in agreement with this sentiment. Blockchain Capital, a venture firm involved in the cryptocurrency markets, told CNBC that they are convinced that prices will return to much higher valuations. Spencer Bogart, of Blockchain Capital, reminded viewers that the market is very long biased. He warned that in the very near future, we could look back 12 or 24 months and wonder why we didn’t get back into the market at this current level. There is a lot of truth to Mr. Bogart’s comments and they are not just words coming from a representative of a venture capital firm involved in the cryptosphere. Bitcoin has experienced > 70% loss in total market cap 13 times in its history and has rallied to higher and higher prices – there is no reason why this trend should end and I do not see any indications that trend would end – if anything, we are showing evidence of that trend continuing. And in simple market behavior, these are the kind of conditions we want to see and we want to read before the next big move: capitulation, fear, uncertainty, people signalling the end of Bitcoin, etc. Hell, I just got my Bloomberg Businessweek magazine and the cover is ‘Rhymes With Bitcoin – Has crypto hit the fan?’ When I see that, I know we’re turning this market around very soon.