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Bitcoin Market Report: May 14 2014

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bank-of-canadaThe Bitcoin exchange rate is finally showing signs of stability after consolidating for the last 2 weeks broadly between support at $431 and resistance at $452. on 6 May the market made a concerted effort to break support, but soon bounced back showing a lot of resilience. On the 10 May the market made a concerted effort to break through resistance and the medium term trend before falling back again to the consolidation channel.

Overall the market appears to be preparing for a breakout. 

Bitcoin 2 week chart 14 May 2014

After a down trend of several months, driven in no small part by news and rumours out of China, the market has performed impressively for the last 2 weeks, most significantly refusing to be thrown below the support of $431 for any length of time.  Although the market also failed to break through both resistance and trend line, the market is sill looking stronger than of late with increasing buying volume.

The most notable consideration is that the market finally appears to have put the seemingly never ending series of rumours and news our of China behind it, largely ignoring the most recent developments. There is no doubt that China has been directly responsible for throwing the market much lower than would otherwise have been the case, with the last major China effect pushing the market below current fair value of $500 where it was previously consolidating very strongly. With no other negative news on the horizon, the Bitcoin exchange rate has every opportunity to continue consolidating at current levels before launching another assault on resistance at $452, breaking through the medium term down trend at the same time. As previously reported, once a new up trend is established he shorts will cover and go and all those sitting on the sidelines waiting for the trend to turn upwards will buy in to the market, which could result in a powerful and sustained up trend. We make be quite close to to this turn of events soon.

Another positive sign for Bitcoin is when the major banks and countries begin to get worried about the potential effect of Bitcoin on their worthless fiat currencies. The latest bank to voice objections to Bitcoin is the Royal Bank of Canada who are concerned that Bitcoin has the potential to "destabilise global finance". This of course is a highly ironic, even amusing statement from a national bank in that the global financial system is already extremely unstable and on the verge of imploding dye to the abject greed and criminal activities of bankers, rampant printing of fiat currency without limit or value backing, and quadrillions of Dollars in bank and national debt. 

The $17 trillion of USA national debt can never be repaid and neither is there any intention to. The likely strategy is to continue to print worthless paper and borrow ad-infinitum until the Dollar implodes, and then simply to scrap it and start over again with a new Dollar. Fiat currencies historically survive around 40 years. The US Dollar is 43 years in to this cycle, extended only through debt and "fractional reserve lending" which has become "no reserve" lending. The total of all debts, funded and unfunded liabilities amounts to quadrillions of Dollars, many orders of magnitude greater than the entire GDP of the world, which will sooner or later implode catastrophically. If this is not unstable, what is?

In reality Bitcoin has the potential to form the basis of a global instrument of exchange and value, simply because it has a finite circulation of 21 million and cannot be controlled and therefore abused by banks and governments.

At the very least Bitcoin will surely become the de-facto global money of the Internet, and this being the case it is only a short additional step, driven by the people, to make Bitcoin the de-facto global currency where people are paid in Bitcoin, save in Bitcoin and spend in Bitcoin, all driven by the people for the people, and there is little governments and banks can do to stop it.

Bitcoin Market Outlook

Bitcoin chart year to date 14 May 2014

The medium terms down rend remains intact with the current breakthrough level at around $446.

Now the Chinese influence is behind the market, Bitcoin can continue to consolidate at current levels while gathering the strength and will to make another assault on resistance and above all the medium term trend line.

With negative news behind the market and a constant flow of positive news, unless heavyweight traders decide to drive the market lower, BTC appears to be gearing up for the next phase of the long term bull market. The next week will provide more evidence as to where the market wants to go next.

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