Bitcoin Trading Alert originally published on November 25, 2014, 9:08 AM.
To the point: no speculative positions.
New Bitcoin derivatives might enter the U.S. market. Bitcoin binary options will be offered by Nadex conditional on the success of the company's filing with the Commodity Futures Trading Commission (CFTC), we read on PRWeb:
The North American Derivatives Exchange (Nadex), a regulated online binary options exchange, today announced it plans to launch bitcoin binary options contracts in early December, subject to filing with the Commodity Futures Trading Commission. Nadex will list the daily and weekly bitcoin binary options contracts with prices based on TeraExchange's Tera Bitcoin Price Index ("TeraBit Indexsm"), the global benchmark for USD/XBT contracts.
Nadex has seen strong consumer demand from retail traders looking for new ways to trade bitcoin. Similar to other binary options contracts on Nadex, investors can trade based on where they think the bitcoin binary contract is heading using daily or weekly contracts. A binary contract is one in which the payoff can take only two possible outcomes: a fixed amount or nothing at all.
We'll see how the CFTC responds to the filing, but it is definitely good to see that new Bitcoin-related products are being offered. While binary options are not the typical product one would choose to hedge a Bitcoin position, they might prove useful in making leveraged bets on the cryptocurrency and, as such, a vehicle for relatively experienced traders.
We would now expect other exchanges to follow suit and offer Bitcoin derivatives in the U.S. on a larger scale, just as derivatives for commodities (including precious metals) are offered. If this is the case, Bitcoin trading will become easier, particularly since derivatives might enable you to take short positions relatively easy.
For now, let's focus on the charts.
On BitStamp, yesterday was a continuation of what we had seen over a weekend. Yesterday, we wrote:
The move up we saw on Saturday and Sunday was a partial confirmation of these words as Bitcoin failed to move lower and pretty much remained in the "tense" area between $350 (dashed red line) and $400. Quite importantly, the volume on Saturday and Sunday was visibly lower than on Friday and the days before. This suggests that the move up might not be the beginning of a new rally, at least not now.
The immediate environment seems to have changed to more bullish. This is all the more the case if you take into account that Bitcoin is moving away from the recent downtrend. On the other hand, we haven't seen a breakout yet. Today, Bitcoin has moved up (this is written before 9:00 a.m. ET) but the volume hasn't been very strong. As such, today's action possibly brings us closer to viewing the current move as a breakout but this is still not the case.
As it turned out, volume picked up later in the day and, overall, the move ended up being relatively strong. Today is a yet another continuation of what might prove to be a new short-term trend (this is written around 8:30 a.m. ET). Bitcoin has gone up to around $390, hitting $395 earlier on. This means that we are now very close to the $400 level. This might prove to be the next resistance level, but at the same time if we see a higher close today, this would mean a third consecutive day of trading against the recent downtrend, and a possible breakout.
On the long-term BTC-e chart, the possible breakout is clearly visible. We are now getting close to $400 (dashed red line in the chart). We're now still between $350 and $400 but closer to the higher end of that range. If we in fact see a close higher today, we might see a breakout but at the same time we have to remember that $400 might prove to be inhibitive to the uptrend. Right now, the best bet is on Bitcoin going further up but we have to remember that any plunge now could have far reaching consequences. We highlighted this yesterday:
The result of the current action might be very important for a longer time frame. This is because we recently witnessed a first higher high in months. The way things unfold now might show if the next important point is a lower low or perhaps another higher high. If this is in fact the case, we might be in for a move up of a larger magnitude in the months to come. Of course, if we see a move down below $350 and possibly $300 this could trigger further selloffs. This is precisely why the current move is definitely one to look at.
This is still very much the case. Right now, the uptick in the price points to a possible resolution to the upside but this is far from certain. If Bitcoin manages to close higher today, we'll be much closer to suggesting going long. This is not the case just yet. Stay tuned.
Summing up, we don't support any speculative positions at the moment.
Trading position (short-term, our opinion): no positions.
Regards,
