Bitcoin Trades Higher on Trump Win
This week the US Elections took centre stage globally. The shocking news of an imminent Trump election victory, rattled mainstream markets across the globe, sending investors into safe refuge assets beyond stocks and bonds. While the stock markets temporarily nosedived, Bitcoin and gold went up 3% to $740 and 4% to $1136 respectively, hours before Wednesday morning,. Bitcoin traded $40 higher within a few hours, topping off at $740. The S&P Futures traded: -5%, DAX: -5% FTSE: -5%, Nikkei: -5% and the worst affected Mexican Peso/USD: -12%. Meanwhile, India’s war on cash reminded us all of the crucial role of Bitcoin, where government control of currency gets in the way of freedom.
Over the month of October, price went up steadily to $745, trading $33 below the pre-halving $778 high from July. This level proved a tough resistance, and it has been no surprise that price had to consolidate before the continuation. My target of $850 – $1000 over the next 3 months is still valid.
The Trump effect, marked by the blue rectangle was purely a speculative pay, that temporarily halted the sideways consolidation since the November 3rd sell off. As of writing this, price is trading at $690, as the retracement from the Trump high seems to have resumed.
A head and shoulder pattern on the 2 hour chart suggests the market will break the neck line at $680, which would open the flood gates for a sell to $635 or as low as $620. This should not be of concern however, especially for medium to long term traders who got in early. This correction is part of a consolidation before a continuation of the bullish recovery we have been watching since September 2016.
Notably, $630 coincides with a 38.2% fibonacci retracement level spanning from the $464 Bitfinex sell off low in August and the most recent $745 top in November. A 38.2% pullback (even 50% retracement) for a $281 dollar advance rise is reasonable. The most popular Fibonacci Retracements 61.8% and 38.2%, alert traders of a potential trend reversal, resistance area or support area based on the prior move.
This pitch fork above depicts a steady climb since August 2015. The white arrows points at current price point, hugging the green trendline that has held as support since the the BitFinex sell off. Any retracement will be limited, before resuming a retest of the red mid average trend line at $850.
Regular readers will remember the chart above that also confirms an expected break out to $850 and reasonable support at $600. The worst case bottom for this retracement should be $610, the 50% fibonacci retracement level. The market is on course for retesting the $1163 all time high, and any sell offs till then are minor blips.
BITCOIN FUNDAMENTAL NEWS
Indians bans 500 RS and 1000 Rs notes, caps ATM withdrawals
India’s Prime Minister Narendra Modi took a major step in fighting corruption and the black market by decreeing the INR 500 and INR 1000 notes be abolished. In a televised addressed to the nation, Modi said the notes would no longer be legal tender from Nov. 8, and will have to be swapped at banks and Post Offices by end of December 30. Tempers frayed as droves of Indians rushed to return the notes, which make up 80% of notes in circulation according to Reuters.
“Nearly half of India’s 202,000 ATMs were shut on Friday and those that operated quickly ran out of the new notes as scores of people descended upon them.”
Bitcoin and Gold Soar on Trump Presidential
The US elections was the epicentre of uncertainty for market traders this week and the upset caused a brief turmoil in most major market indices as per Fortune. Before the results were announced, Bitcoin traders believed a Trump win could trigger price boost.
“The shocking news of Donald Trump’s election victory rattled markets across the world, leading some investors to seek refuge in assets outside of stocks and bonds.”
XBT Bitcoin and AU gold were two assets that fared better than most, pushing up to $740 and $1136 (3% and 4% respectively) on Tuesday night, November 8, and trailing off on Wednesday morning.
According to Coindesk, a Trump presidency could hold the right ingredients for a US dollar collapse.
Economist Proposes Bitcoin for Zimbabwe’s Currency Woes
Zimbabwe’s economy has been fast running out of cash, due to a shortage in US dollars. Infamous for Weimar Republic-esque levels of hyperinflation, its government recently decided to introduce dollar-backed “bond notes
According to Mail and Guardian Africa, Economist Russell Lamberti, co-author of When Money Destroys Nations, thinks it’s time Zimbabwe considered a digital currency like Bitcoin.
“If Zimbabwe establishes a privatised bitcoin national currency, if the market naturally went to a bitcoin type currency, as other currencies around the world indicate weakness with money printing happening, you’d have a whole lot of currency flowing into Zimbabwe.”
Bitcoin Weekly Price Forecast
This week, I am bracing myself for a retracement to a low $650, and open to lower lows at $630. This could last over the next couple of weeks. Any bearish turns will be short lived before a resumption of the trend.
I recommend holding and buying the dips.