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Bitcoin Market Report: 23 April 2014

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bitcoin-yachtThe Bitcoin exchange rate continues to consolidate around $500, but with a weaker tone between $480 and $500 as sellers begin to get the upper hand again. If Bitcoin is to successfully consolidate around $500 to form a base for the next phase of the bull market, it needs to do so convincingly and for as long as required. If the exchange rate cannot hold between $490 and $520 the most likely outcome is a re-test of $450 and then $400.

The next couple of days will provide clearer short term direction.

bitcoin-10-day-chart-april-23

Bitcoin continues the consolidation around current fair value of $500 in the absence of any significantly market moving news one way or the other. So far during this process any weakness has been short-lived as the exchange rate quickly recovers back to around $500, showing that buyers are quick to pounce on any weakness, and that sentiment is much more bullish than it was just a couple of weeks ago during the news and rumours out of China.

At the time if writing the Bitcoin exchange rate is hovering around the $485 level, in need of buying support to lift it back to around $500. And protracted weakness at these levels could eventually signal a re-test of initially the $450 level from which it can bounce back for a further round of consolidation around $500, to slide further to $400 for a further rebound.

The fundamentals for Bitcoin are excellent and improving by the day as more and more businesses, consumers and investors become involved. While merchants are increasingly recognising the benefits of Bitcoin there are more and more supporting services being launched for point of sale transactions, ecommerce, services and much more. ATM's locations are expanding rapidly, as are the variety and features of ATM's offering an option for every location and jurisdiction.

Bitcoin is being accepted for an increasingly wide range of goods and services by both business and private individuals. The header picture in this article is an $11 million luxury yacht that can be purchased for Bitcoin, making it probably the most expensive item yet that can be purchased with the crypto-currency. As this process spreads and makes news headlines, it also brings awareness to millions of potential users as well as the confidence to buy and use Bitcoin.

Bitcoin is following the same evolutionary curve as many pivotal technologies such as the desktop computer, Internet, fax machines, CD and DVD players and of course the Internet. There is always a set of balancing and inter-dependent dynamics between availability and demand, where each side is dependent on the other. Sooner of later an equilibrium, a critical mass is reached were all the dynamics and fundamental factors come in to alignment, and then the technology takes of exponentially and becomes mainstream and another household standard.

Bitcoin is currently where the Internet was approximately 15 years ago but is on a much faster growth curve due to the awareness brought by the Internet itself, less complex technology that is within the reach of most people, and because the population as a whole, being used to computers, the Internet, smart phones etc accept and use technology much more readily.

From this perspective we can expect Bitcoin to really begin to take off and become accepted over the next 2 years, and reach critical mass to reach mainstream use in approximately 5 years. This is always assuming special situations do not intervene which causes accelerated acceptance such as an implosion and collapse of the global financial system which is inevitable - probably before 5 years is past. Another wildcard are geopolitical situations such as the crisis in Ukraine, which is a re-run of Libya, Syria and other countries by the hegemon, but massively more risky and volatile and potentially disastrous, and which could easily escalate out of control as it is now. In these situations Bitcoin can become a safe haven and store of value along with Gold and Silver. 

So Bitcoin market movements now are really academic, to be expected, the real benefits and rewards coming years down the road.

Bitcoin Market Outlook

bitcoin-chart-april-23-2014The Bitcoin exchange rate is approaching a critical phase whereby it must either consolidate convincingly between $490 and $520 for as long as necessary, supported by bullish sentiment and buy side strength, or re-test $450 then $400 if the former fails to hold. Any such re-test would be short lived with bargain hunters quickly swooping in to buy at bargain prices.

To that end we are looking for the exchange rate to regain the crucial $490 to $500 level or thereabouts over the next couple of days.

Whatever happens $500 represents current fair value and it is only a matter of time before consolidation is complete at that level and the next stage of the bull market commences.

The emphasis should be on buying for the longer term as opposed to hoping for short term gains in a market which is still volatile and unpredictable.

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