Bitcoin Trading Alert originally sent to subscribers on March 10, 2015, 12:15 PM.
Briefly: no speculative positions.
The Winklevoss brothers have offered some more of their views on Bitcoin in conversations with the Business Insider, we read on the news website:
An analogy for the current state of Bitcoin often used by enthusiasts — and brought up by Cameron and Tyler when I spoke to them — is the early Internet. “When email first came out I don’t think there was a compelling argument to say you need to use this to make your life better,” they say. “It’s really up to the entrepreneurs and the technologists to build the infrastructure and applications out so that it’s super easy — and dummy-proof, so to speak — to use.”
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Their vision of a mature Bitcoin frames it as more similar to a “large blue chip stock” — volatility all but eliminated, more liquidity in the market, with a dramatically increased market cap. The construction of basic infrastructure like regulated exchanges is framed as an essential stepping stone in the process.
“There will be a future where people will use bitcoin, and they won’t even know they’re using it. At that point it’s everywhere — it’s a part of global finance, it’s a part of our everyday lives. In the same way using email was very difficult and the edge of technology… it’s always difficult, it’s problematic, it’s painful to use, and we’re at that point in Bitcoin right now. The point where we’re beyond it is the point where people don’t think of email as the bleeding edge of tech because it works so well everyone uses it… I think it’s going to get to that point.”
That’s an opinion and there’s no guarantee that it’s accurate whatsoever. However, if you take a look at the Bitcoin system, you’ll see that some parallels between it and the email might be warranted. Quite interestingly, when paper mail between individuals was widespread, letters had to be physically transported by the postal service (intermediary) to the recipient. This is somewhat similar to how banks transfer money from one account to another. The introduction of the e-mail didn’t change much at first but with developments in the infrastructure, e-mails have all but replaced private paper correspondence, cutting out the intermediary costs. It might just as well be the case that Bitcoin will take a similar toll on traditional banking services, particularly on money transfers.
One difference here is that money transfers now are, to an extent, computerized, so it might be harder for Bitcoin to compete with them than it was for the e-mail to compete with traditional letters. On the other hand, with infrastructure being built up around cryptocurrencies, it is possible that their advantages will finally prove to be enough to make a significant dent in the payment system. If the costs of infrastructure don’t show up as transaction costs, at least not as high as those charged by banks or credit card companies, Bitcoin might become a very appealing method of transferring value across the globe.
For now, let’s focus on the charts.
We saw a move up yesterday and the volume also went up but not to really significant levels. Bitcoin moved more visibly away from $250 (green line). Yesterday, we wrote:
(…) This might suggest a more bullish outlook for the short term but we would still remain cautious as $250 is still pretty close and the recent moves haven’t really been representative of a game changer. We are closer to seeing a move to $300 but we’re still in “grey territory” and a move down now could erase all of the recent bullish implications.
Yet another move up made the short-term outlook slightly more bullish. Today, we’ve also seen appreciation and a volume possibly higher than yesterday (this is written around 11:30 a.m. ET so the day is far from being over, mind). Does this mean that we’re getting closer to bullish territory? Our opinion here would be “not necessarily.” We have just seen a strong correction to the upside. Bitcoin is close to $300. If Bitcoin goes above this level and manages to stay above it despite some form of mild depreciation, we might consider long hypothetical positions. But the prolonged rally we’ve seen so far has brought Bitcoin into overbought territory. This suggests a pause or reversal might be in the cards. Another consideration is the fact that the psychological level of $300 might trigger downward pressures. The volume hasn’t really been this strong recently so a failed move above $300 could be an indication that the rally is over.
On the long-term BTC-e chart, we see Bitcoin moving into the direction of $300, which also coincides with the level of the late-January local top. If this works as a psychological level for traders, we might see a bounce back off this level to the downside in the next couple of days. Yesterday, we commented:
We’ve seen some movement to the upside today but it hasn’t been strong enough to tilt the outlook to decidedly bullish. We might be seeing a breakout but the overbought territory is relatively close and this would suggest that a reversal might be seen in the days to come. Of course, there are no sure bets but we would still be inclined to wait for a confirmation of a correction to the downside.
The outlook has just become more bullish but not bullish enough to open hypothetical long positions. In fact, if we see a failed move above $300, we might actually open hypothetical short positions since this would indicate that Bitcoin might be reverting to its recent trend down. This is a particularly tense time in the market as we might see stronger moves in the next couple of days, not only in terms of the price but also volume.
Summing up, we don’t support any speculative positions at the moment.
Trading position (short-term, our opinion): no positions.
Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
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