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Bitcoin Market Report: 5 April 2014

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bitcoin-6-month-chart-april-5-smallTowards the end of the week the Bitcoin exchange rate bounced from the lows of earlier in the week resulting from a succession of rumours and news out of China relating to Bitcoin exchanges. It seems likely that Bitcoin market participants are generally bullish and happy to buy at what is perceived to be a  bargain price, with high volume selling, probably out of China due to the latest developments there, suppressing the exchange rate.

The market is still reaching a crossroads, the next few days pivotal.

 bitcoin-1-month-chart-april-5

Despite a succession of negative news coming out of China, which was actually just recycled versions and varying degrees of confirmation of the same news, the bulls kept fighting back bringing the market up $30 from the lows, finishing the week around the $450 level.

Overall however the market is failing to make much headway, with the 50/200 day moving average moving ever closer to a "death cross" conjunction, and possible market capitulation to lower levels. With the exchange rate unable to make much progress against a head current of bad news, perhaps this is what the market requires to form a solid basis for consolidation and sustained upwards trend.  

Aside from the ongoing situation in China, there has been little in the way of big news one way or the other. On the negative side the prospects for Bitcoin start-up Neo and Bee look bleak, with allegations of fraud, a missing CEO and a walking out of allegedly unpaid staff all pointing to an imminent collapse. The share price of Neo and Bee has already collapsed to 0.0001 BTC from 0.002 BTC following the re-opening of share trading at Havelock.

The constant stream of positive news for Bitcoin continues unabated with ongoing Bitcoin acceptance and applications, including eBay adding a new "Virtual Currency" category so Bitcoin can be traded on the auction site. 

The latest poll by Bitcoin reporter asked voters for their price prediction for Bitcoin at the end of April - these are the results after 297 votes so far:

bitcoin-poll-price-prediction-end-of-april

 

Under $400- 14.14%
$400 to $449 - 6.06%
$450 to $499 - 6.73%
$500 to $549 - 16.50%
$550 to $599 - 16.84%
$600 to $649 - 17.51%
$650 to $700 - 4.71%
Over $700 - 17.51%

Over 50% of voters feel that the exchange rate at the end of April will be $500 and $649 which is bullish sentiment from current levels. Additionally over 17% of voters believe the exchange rate will be over $700 which is $250 or 56% higher than current levels.

Overall sentiment among voters remains firmly bullish, and if translated in to actual buying action would be supportive of the exchange rate, which appears to be confirmed by current price action.

If the stream of bad news coming out of China abates, allowing the bulls to control the market, the exchange rate will soon rise back to current fair value of around $500.

Bitcoin Market Outlook

bitcoin-6-month-chart-april-5

With the ongoing market setbacks, the 50/200 day moving average "death cross" looms ever closer. In much more liquid and well established markets this convergence is usually a very reliable indicator of a major trend change, in this case in a downwards direction. Whether the same holds true of the much less liquid Bitcoin market remains to be seen, but nevertheless cannot be viewed as positive, the bulls not collectively strong enough to turn the tide of heavyweight selling for any length of time.

These next few days then will be critical. What the market needs now is for the negative news, particularly out of China, to abate, with the flow of good news continuing, and ideally with some really positive news from a major source.

If the market continues in the same way as it has been, then something will have to give soon, and perhaps a capitulation to a lower, sustainable base from which the market can resume an upwards trend again is what is required to place the bulls back in control.

By this time next week the immediate prospects for the market will be much clearer.

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