Yesterday at 20:00 GMT + 0, Kool and the Gang decided it was time to go stop hunting. The price quickly fell $10 to $226 and it looked as if $220 was next up. However, a malfunction in Bitfinex’s order matching engine stopped the party in its tracks. Various users reported weird account balances, and the inability to place and cancel orders. What do panic traders do when a Bitcoin exchange is stalling? Press a lot of buttons very quickly and hope for the best. The frantic actions caused the price to quickly spike to $235, then careen back towards $226. Word to the wise: when the exchange is stalled, sit back and do nothing. At BitMEX if your browser its connection with the trading engine, you are notified immediately and unable to click buttons (I will expand on that in a subsequent post). Take a read of BitFinex Appears To Have Crossed Streams, BTC Crash On Hold for a more detailed explanation about yesterdays price action.
The market is flashing yellow with caution. Leveraged longs should use this respite to reduce leverage, and return to the sidelines. They should thank their lucky stars that Bitfinex’s Alphapoint roll out is experiencing growing pains. Otherwise, a messy and chaotic wall of liquidations looked likely yesterday. I wrote about the $213 – $225 margin call sweet spot in the May 4th Crypto Trader Digest. The savvy operators want to push the market to these levels, and let cascading margin calls do the heavy lifting.
The market is now consolidating around $230. Expect another attempt in the coming days. This time the longs may not be so lucky. If you share my views, begin shorting XBUK15 with a downside target price of $220. I wouldn’t consider the correction broken until the market can retake $240.
Another push was made for $210 today. The price reached a low of $213 on Bitfinex before rallying back to $220. The retrace was a weak attempt at a rally. A renewed fade to $210 will begin shortly, and expect a hard fought battle. The overall downward trend remains, and the market awaits the all-important retest of $200.
Sell XBUK15 above $215 with a $210 target price.
In the News
Capital Controls Arrive: Greece Begins Confiscating Deposits Of “Small Debtors” (Zerohedge)
The “War on Cash” Migrates to Switzerland (Contra Corner)
The $230 seal has been broken. The price dipped below $230 for a few moments on Bitfinex during the China evening session. $230 has not be definitively broken. While China is revelling, traders will make another stab at $230. This recent rally lacked sufficient vigour as $240 was not punctured on the upside move. If $230 falls, a retest of $216 will happen in short order.
Position for a possible break below $230 by accumulating a short position in the $230-$235 range using XBUK15.
In the News
Largest Bank In America Joins War On Cash (Zerohedge)
itBit Files For Banking License in New York (Business Insider)
Dogecoin Founder Exits Crypto Community Citing ‘Toxic’ Culture (CoinDesk)
The price hovered around $235 for the majority of the trading day. Traders are waiting on the side lines until either $230 or $240 is retested. Although the overall trend is bearish, a rally to $240-$250 cannot be ruled out. Given the rapid decline from $300 to $216, there is room for a sustained dead cat bounce before $200 is retested.
If you have some bullish bones left in you, accumulate a long position in XBUK15 positioning for a breakout above $240.
In the News
Margin Call: How It Works (BitMEX Blog)
Brock Pierce Elected Bitcoin Foundation Board Chairman (CoinDesk)
Wednesday seems to be the day of the week that things start moving. The price shot up through $230 to a high of $237. $240 looks likely to be retested. A failure to retake $240 could lead to a swift return to $230 and possibly below.
Sell XBUK15 as the price retests $240, with a target price of $230.
In the News
“Not-So-Decentralized” Ripple Freezes $1m in User Funds (Inside Bitcoins)
Rand Paul Chides ‘Naysayers’ Who Want to Regulate Bitcoin (American Banker)
All quiet on the trading front. The price range was $222 to $227 on a light volume day. The market is in another holding pattern awaiting a sudden move higher or lower. $230 looks to be a formidable level to punch through. Expect the market to drift lower and retest $218.
Accumulate short positions in XBUK15 in the high $220s looking with a downside target price of $218.
In the News
The Bankster War on Cash; JPMorganChase Begins to Prohibit the Storage of Cash in Its Safety Deposit Boxes (EPJ)
Tsipras to Seize Public-Sector Funds to Keep Greece Afloat (Bloomberg)
US Police Officer Charged with Receiving Stolen Bitcoin Miners (CoinDesk)