Bitcoin Price Analysis 8 August 2016
The price of bitcoin took a massive hit after news of the BitFinex Hack came out. 120,000 Bitcoins stolen is the second largest collapse of a mainstream exchange after Mt. Gox back in early 2014. Just like in 2014, the market sold off, 25% this time, to an unprecedented $465 low. In fact, there is reason to suspect the hackers piled up on short positions just before the news of the hack broke out.
The hack at BitFinex happened right after a pre halving bull trend to $780, as prices dragged out on a sideways consolidation. Now, the price has retraced back up to $600 as of writing this.
The timing of the hack right after a 2 year high is suspect. Mt. Gox happened right after price had peaked at an all time $1200. Price subsequently sold off and retraced back up to $1000. What followed was after was long term bear market that lasted 18 months.
Price is currently retracing from the $465 low, forming a series of higher and higher lows in the process. The cliff at $660, from where price fell off is a reasonable target for further upside. But, before $660 level, $600 resistance must be overcomed.
The trading range marked above by $580 on the upper and $560 on the lower broke out to the upside to a new mini range right below $590. An uncanny resemblance between both ranges, so a break out from the $580 – $600 range is imminent. This should break out to the upside and head up to $630.
The sideways range however, might go on for a while and even possibly dip again to $580, or a larger dip to $560 for an expanded larger $560 – $600 trading range. Breaking past supports and resistance levels typically takes at least 2 attempts, at times 3. The first attempt failed to break on the hourly chart.
Using fibonacci retracement levels, 61.8% is a common retracement level for price drops that find a bottom. The long wick to $465 ends at $539 (23.6% fib level) and confirms a temporary bottom. Price should retrace up to at least $660 in the coming weeks, with some room for overshoots above this level.
Elliott Wave chart analysis also supports this.
“We know there is a bottom here because of the triangle. We know abc’s retrace at least 62% as a strong guideline. Not to mention that the abc could have been a wave ii of sorts.”
“The impulse had many primary wave extensions which is why it seems it has bottomed on just one sharp fell swoop. Having gone too far none the less I think the bottom very probably in.”
Hong Kong Bitcoin exchange Hacked, losses 120,000 Bitcoins
On Tuesday, BitFinex, an exchange based out of hong kong suffered a massive attack on its customer segregated wallets. $ 72 million worth of funds were stolen, propelling the hack to the second largest hack in history after Mt. Gox.
Following this event, the price of bitcoin took a hit, falling sharply to $465 within a matter of hours, a 25% sell off. By Wednesday, price had quickly retraced back up to $542.
The exchange is planning to spread out the losses amongst its customers, an announcement that drew sharp reactions from the community. Socialized losses are much similar to bank haircuts.
Zane Tackett, a Director at BitFinex, emphasized on this podcast, the company would not contribute to covering losses
Swedish Bank Invests $4 million in Bitcoin Startup
It is always bullish for Bitcoin when mainstream banks begin dipping their toes into Bitcoin and the Bitcoin Blockchain. This week, Swedish banking giant SEB Group and a Danish VC firm invested $4m into Bitcoin Startup and payment processor Coinify. Coinify processes payments in Europe supporting 15 digital currencies.
“Coinify has developed a unique platform for blockchain payments and fits perfectly in our portfolio of FinTech investments. We at SEB Venture Capital really look forward to contribute to Coinify’s future development.”
Bitcoin Weekly Price Forecast
The target for the short term is at least $660, and could go up as high as $700. Another test of $600 resistance should occur in the next days, and a failure to break will see price drop to $580, or even to the lower limit at $550. This should not be of concern as it activate the large trading range.
The bigger concern is the trend over the coming months. Breaking multiple support levels, combined with the bad news impact of the BitFinex hack has opened the door to lower price targets and a resumption of a bear trend.
This forecast suggests a retest of low $300 and a long term rising trendline from 2011. It is worth a look, after recent events. The much anticipated mega bull to $1200 seems to have taken a back seat for now