It’s the dawn of a new month and in what will likely be the beginning of Bitcoin reversing previous losses. For perspective, Bitcoin prices are up three percent in a week over week basis. Because of these developments, Bitcoin bulls can begin looking for triggers on dips to load up in lower time frames.
From the NewsThe consensus method behind Bitcoin (BTC) is power intensive and not “Eco-friendly”. Besides, this method has evolved and expensive gadgets are required for “mining”. So, with news that heavy flooding in Chinese province of Sichuan causing “extensive” damage on mining gear as reported by Global Finance, many were worried that that the total hash rate of the network would take a hit.
Eric Meltzer, a partner at INBlockchain, the largest blockchain-focused fund in China, reported that rumors suggest a bitcoin mining facility in China was destroyed by a massive flood that affected the entire province of Sichuan, China. pic.twitter.com/6oViROPVUo
— ok (@dlrufkgk) July 1, 2018
But luckily, according to data from Blockchain.com, the Bitcoin network hash rate actually rose during those two days. This might be all thanks to the design of the Bitcoin and underlying blockchain technology. The decentralization and distribution design did bring in stability regardless of the fact that close to 70 percent of the world’s Bitcoin mining happen in China. Most of this takes place in the provinces of Sichuan where it’s relatively cold and the cost of electricity is comparatively low.
In other news, do you think the introduction of Bitcoin Futures at the Chicago Mercantile Exchange is the force behind this year’s BTC declines? There are solid reasons to believe because according to a research paper published at the Federal Reserve of San Francisco site, the peaking of BTC prices did coincide with the CME’s listing of Bitcoin Futures in Dec 2017. Yes, the total trading volumes of the “risky” Bitcoin Futures is still low and won’t adversely affect price. However, according to the researchers and echoed by a Japanese economist, the reaction and the consequent sell off were consistent with how assets prices respond once Futures trading are availed.
Bitcoin (BTC) Technical AnalysisWeekly ChartBitcoin Weekly Chart by Trading View
Week over week, Bitcoin prices are registering greens for the first time in two months or so. The weeklies paint a clear picture for our assertion and even if this is what could spur further gains this week, we shall take a cautious approach. First, we should realize that this injection of momentum is happening at key supports: at $6,000.
This was our sell trigger in our previous analysis. Even though our shorts with stops at $6,800 are not yet live, it’s better to stay neutral and move them to break even depending on where you sold. The reason is simple: this might after all be short covering and a recovery after the expiration of June’s BTC Futures.
Then again, this BTC recovery has low volumes inconsistent with strong recoveries. Besides, it didn’t conclude with a total reversal of week ending June 24 losses for a nice double bar bull reversal candlestick.
Daily Chart
Bitcoin Daily Chart by Trading View
The bull injection of momentum at $6,000 is clear. Here there is a nice double bar bull reversal pattern with markedly high volumes and a follow through on June 30 confirming that indeed there is a shift in momentum.
So, swing traders can: either buy at current spot prices with stops at $5,550 or June 29 lows or buy once prices edge past $7,000 as we had mentioned before. The latter is a reserved but a sure method of verifying if indeed there has been a change of momentum.
Disclaimer: Views and opinions expressed are those of the author and aren’t investment advice. Trading of any form involves risk and so do your due diligence before making a trading decision.
