Bitcoin Price Action Last Week

Last week, before announcement of the hack we spoke of a structural support of $450 if Bitcoin pushed below levels of $580. This indeed seems to have happened with Bitstamp bouncing sharply off $465, around the long-term resistance level we saw for almost 6 months from December last year (see blue line above).

We are now trading in the $580-$610 support / resistance levels that were mentioned last week (red line above). The move downwards was a direct response to the announcement of a 120k Bitcoin hack at Bitfinex. As more details have come to light, price has rallied back, almost brushing off the theft and is now trading at its 12H 200-period moving average.

This bounce shows strong confidence that the cryptocurrency will survive, despite several news outlets questioning the future of the technology after this unfortunate incident. Indeed, Bitcoin will survive. The magnitude of the loss was only a fraction of the Mt.Gox hack. Unfortunately this incident will tarnish the public’s perception of the technology, and could slow down the flow of fresh funds into the industry. This could delay any near-term mooning.

Looking in the short-medium term price outlook, MACD and RSI are trading lowish and indicate that if we can push past the $610 resistance level then we could move forward back towards the $680 range once more.

What will be interesting is what happens to price when Bitfinex reopens for trading. Already there is struggle across exchanges for a price leader, with large deviations in price across exchanges and currency pairs. It’s assumed that there will be a premium on XBT/USD when Bitfinex reopens due to the bankrun-exit of funds, but will that price-push translate to other exchanges? I hesitate to think so as it is an isolated event to Bitfinex, however as traders move Bitcoin off that exchange to send to other exchanges, we may see a small down blip due to conversion of Bitcoin back to USD before we move up again.

Look for a short-term short scalp with entry between $590 – $600 upon Bitfinex reopen, add tight stops above the resistance of $610.