Bitcoin Market Analysis: Week October 27-November 2

In last week’s update, the expectation was for new market high to carry the momentum from the yearly lows of $275, but the $400 resistance zone proved to be too much. We kept waiting for a noticeable higher low the last few weeks and now that we have one, it might be a little to much to handle at this stage and has caused some loss in confidence.

The general view on the street right now a little down. Sure there are plenty of people looking to buy hundreds of bitcoins for cash, but the average person is still not convinced that this will be the future and with the decline now going on for over 9 months, it’s getting harder and harder to convince your neighbors to take a plunge. Exchanges are also taking a hit, first with MinPal going down and now Cryptsy facing a lawsuit. Bitstamp has just announced that it will confiscate unverified accounts, which is a very disappointing sign for the industry. The upcoming finalization of the BitLicense should cause some movement though it’s impossible to say which way. It all depends how it will be perceived on Wall Street because no mater what they do, the small bitcoin facilitators will get crushed by regulatory and compliance fees.

On the bright side however, the governments of the west are cranking up enforcement and condemning cash, unless of course they need police to just take it as they see fit. That’s the kind of news people should be paying attention to that might drive the average citizen into a more secure asset. For some specific examples, banks in California are no longer allowing Cash deposits into other people’s accounts and at the Canadian border they are asking people if they are traveling with over $1,000 in cash. As for law enforcement, simply google ‘civil forfeiture’ on youTube and there will be infinite number of stories. As people realize that police now have the power to just take all your cash at will (at least in the US) people will begin to look at more secure ways to move their wealth or at least their weekly pocket spending and embrace Bitcoin. American’s might also begin to appreciate those 3rd world countries they always make fun of, where a $20 bribe will get you out of any routine traffic stop.

The Month Ahead

There is very little in the charts this time. Most of the Bullish momentum from last week is gone and if the $340 area is broken to the downside, those in the Bitcoin community might have to pinch their Satoshi’s come the holidays. We are sitting right at support and might consolidate here for a bit. Let the price guide you. We can consider things bullish once again if we get above $400 and the continuation of the Bear under the $330-340 zone.

The Week Ahead

The shorter-term chart has a tighter range. Take a look at the Fibonacci retracements that have been added. They seemed to have stopped the slide at the $345 mark and have shown to be Resistance twice at around $363 (38.2% retrace). Since we are right in the middle of this range look for one of these lines to break to signal some directional bias.

Conclusion

We are at a very critical point that could dictate how the year will end. Clear support in the $330-340 zone and Resistance at $380-400 with a minor hurdle at $363-365 that already had two rejections.  This is a bad time to pic a direction so let the price and volume be your guide. There was a lot of buying in early October to drive the price from $275 to $420, let’s see if another set of buyers can step in or those that made some money on that move will look to take what’s left of their profits or get up with minor loses.

Reference Point: Monday Oct 20 8:00 am ET, HitBTC Price $356

About the author

Tone Vays is a 10 year veteran of Wall Street working for the likes of JP Morgan Chase and Bear Sterns within their Asset Management divisions. Trading experience includes Equities, Options, Futures and more recently Crypto-Currencies. He is a Bitcoin believer who frequently helps run the live exchange (Satoshi Square) at the NYC Bitcoin Center and more recently started speaking at Bitcoin Conferences worldwide. He also runs his own personal blog called LibertyLifeTrail.