Lots has happened to bitcoin since our last report. There was a huge washout in price after the $400 support level broke. The price was already faltering around $420 when an article came out about Mike Hearn (bitcoin developer) quitting, selling his coins and declaring bitcoin dead. That was the 89th bitcoin obituary.
After the breakdown of $400 support, the price crashed down to $350 and slowly retraced back up. Once it had a 61.8% retracement at $380, the price rallied all the way up to $428. It turned out that this was a bull trap, making it the third one in a row.
Right now prices have been consolidating between $390-$400 with stable volume. Bitcoin prices are in a channel between $350-$460 and $400 seems to be a magnet area.
The Bitcoin blocksize debate has created FUD (fear uncertainty and doubt) withing the community. A technical debate turned into smear campaigns and civil war amongst bitcoiners. This had a bearish impact on the price and stopped bitcoin’s bull run dead in its tracks.
The fact that bitcoin price has managed to hold up to $400 in spite of all the fear and drama is actually really bullish. What this tells me is that there is a genuine growth in user adoption to support these price levels. Coinbase announced over 3 million wallets and Bitpay has reported a +1000% growth spurt in Latin America.
Bitcoin developers tend to be more concerned about the technology instead of the price. Bitcoin miners on the other hand are entirely dependent on the price. Miners are the most heavily invested in Bitcoin and need to make ROI to stay in business. It’s not in the mining community’s interest to support anything that can damage the price or longevity of bitcoin.
It’s likely that consensus will be reached amongst miners who need to be more conservative about changes made.
The blocksize debate has led to a revival in the altcoin markets. Many traders are hedging through diversification. The first market to rally was ethereum, with most volume happening on Poloniex. Ether had +200% increases in price with a trading volume as high as $12m. After going parabolic the ether markets dumped and are showing the first signs of a reversal. There is a head and shoulders pattern starting to form.
Most of the other altcoins are getting pumped by Chinese exchanges BTC38 and Jubi. There are many dead coins that are being pumped randomly.
The second best performing crypto this month is dogecoin with 170% gains! Every year Chinese whales accumulate cheap coins within the 20-30’s satoshi range and then pump prices up.
NXT gained 68% this month, XMR is up 45%. There’s green candles across the charts as bitcoin prices go sideways.
Litecoin is late to the party and has yet to rally. It’s bottomed out and showed the first signs of a potential bull run. It will likely get its turn to rally and when it does the gains will may be aggressive.
If Bitcoin decides to break $400 resistance then the altcoin party may come to an end, which will provide good opportunities to short on Poloniex.