Bitcoin Trading Alert originally published on October 14, 2014, 10:25 AM.
Briefly: long speculative positions, target at $500, stop-loss at $377.
Bitcoin will get more lobbying power as the financial transaction company Coinbase has launched lobbying efforts, we read on the Hill website:
A former Senate staffer is joining Coinbase, a company that allows buyers and sellers to use digital currencies such as bitcoin through an online, virtual wallet.
John Collins, who previously worked for Sen. Tom Carper (D-Del.), head of the Senate Homeland Security and Government Affairs Committee, will lead government affairs for Coinbase.
Carper's committee has taken a leading role in the Senate on virtual currencies, and Collins served as the panel's top adviser on the issue. He also ran Carper's reelection campaign in 2012.
"At Coinbase, John will engage with and educate public officials and lawmakers about bitcoin, and help drive an informed discussion around public policy that protects consumers without stifling the incredible innovation we're seeing at all levels across the bitcoin community," the company said in a statement.
This is good news for Bitcoin, since lobbying efforts are likely to increase the overall level of awareness among policy makers. This might result in more informed decisions being made on Capitol Hill and, ultimately, in regulations which are not aimed to curtail Bitcoin but rather at introducing a legal framework in which people can benefit from the use of the currency with risks minimized.
For now, let's turn to the charts.
On BitStamp, we saw an important move yesterday, when Bitcoin moved above $400. The move happened together with an explosion in volume, which made the move all the more important. If you recall our yesterday's comments:
On BitStamp, we saw the rally slow down over the weekend. Bitcoin stayed below the Thursday's high and the volume was down, but not exactly weak. All the daily closes over the weekend were above $350. Yesterday, there was definitely more action to the upside and the volume was elevated. Bitcoin closed close to $380 which looks like a more visible sign of strength.
Today, the action has been up and down (this is written before 9:45 a.m. ET) and now the exchange rate is more or less where the currency started the day. The volume is not extremely strong but can't be described as weak either. As such, we haven't seen a change in the current move which still seems to be up. There still seems to be room for appreciation, at least to $400.
As it turns out, the move to $400 was completed not long after our essay was published. The currency retraced to slightly above $390 later on. As such, the move above $400 was not yet well anchored.
Today, the action has been up one again (this is written after 9:30 a.m. ET), Bitcoin is above $400, and it even went above $415 earlier in the day. The volume might end up being lower than yesterday but most likely still relatively significant (the day is not over yet).
For now, our suggested positions are already in the black. We suggested possible longs when Bitcoin was at $360, and with Bitcoin now at $403, this amounts to a gain of 11.9% in only 6 days (including today, calculations before transaction costs).
Will we see more appreciation?
On the long-term BTC-e chart, we see that the move from $300 to $400 has been completed. The main question now seems to be whether it will be continued or reversed.
Yesterday, Bitcoin moved to above $390 but retraced to $385 before the end of the day. The volume was relatively significant which makes the day important for traders. Bitcoin was yet to take out $400, contrary to what we saw on BitStamp.
Today, the move up resumed, reaching $408 at one point, before retracing to above $390 at the moment of writing. The volume is still relatively significant. Currently, we have a mixture of a relatively strong volume, a move up but also a lack of decisive move above $400. In this environment, and following a relatively strong move up, we might be in for a slowdown or even depreciation. On the other hand, a move above $400, if it is confirmed, might set off another wave of buying. In these circumstances, it seems to us that long speculative positions might still be the way to go. To guard your possible gains on our suggested positions, currently at 11.9% (looking at BitStamp and before transaction costs), against possible depreciation, we move our stop-loss level higher, to $377.
Summing up, we think speculative long positions might still be the way to go.
Trading position (short-term, our opinion): long speculative position, target at $500, stop-loss at $377.
Regards,
