Trading

Price Analysis as Bitcoin Bounces Off Of 100 WMA

September 30, 2019

Fundamentals

Lou Kerner, a partner at Crypto Oracle fund and a former Goldman Sachs analyst, believes that Bitcoin doesn’t need institutional support to push higher. Speaking to CNBC, Kerner said that it seems that the “buy the rumour, sell the news” scenario was at play in the previous week, referring to a new Bitcoin ETF-like product, launched by the investment giant VanEck and financial technology player SolidX Management.

“We don’t need institutions to come to this party for Bitcoin to break out again,” said Kerner, while adding that in the Bitcoin case, institutions will be followers rather than party leaders. 

The product launched by VanEck and SolidX is a more limited version of the traditional exchange-traded fund (ETF), which is a marketable security that contains, in the context of conventional markets, different types of investments, including stocks, commodities, bonds, etc. 

“This is a step in the right direction,” said Chris Hempstead formerly the head of ETF sales at Deutsche Bank about the ETF-like product launch,. 

“We’ve had this kind of thing happen in the ETF world over and over again for the last 25 years. What you have here is a new idea that’s making progress towards something that people are very familiar with.”

VanEck’s attempt to launch the first bitcoin ETF was put on hold by the US Security and Exchange Commission (SEC). However, SEC’s reluctance to allow the first Bitcoin ETF didn’t stop the investment giant from offering a similar product to institutional investors. 

“The big [cryptocurrency] exchanges are completely unregulated, and the traditional world has sort of said, ‘I don’t want to look at this. I’m not going to touch it,’ even though CoinBase has 20 to 30 million client accounts,” said Jan Van Eck, the CEO of Van Eck Associates and president and CEO of the VanEck Vectors ETF Trust.

“So, these two worlds are completely separated, and we’re trying to do a little bit of an overlap and we’ll see if it works,” added Van Eck.

Similarly, the digital asset management company Wave Financial has announced the launch of the “Wave BTC Income & Growth Digital Fund”. The custody for the fund will be provided by Fidelity Digital Assets, a subsidiary of the investment giant Fidelity. 

“We have a number of investors that have expressed interest and we are working to get them the actual private placement memorandum and subscription agreement,” said Ben Tsai, managing partner of Wave Financial.

The new fund has opened for subscriptions as Wave Financial searches for new investors for the first crypto-derivatives-based yield fund on the market.


Technicals

Following the triangle break, the bears pushed the price below the horizontal support as well (the purple line). As expected, the price stopped right at the 100 WMA, which currently sits just above the $7,700 handle. The start of the new week has been marked with another tag of the 100 WMA.



BTC/USD weekly chart
BTC/USD weekly chart

As seen in the chart, the most recent red weekly candle has created a lot of problems for the BTC bulls. As a matter of fact, the last time Bitcoin lost more than 19% of its value in one week happened in November 2018. As seen in the second BTC price chart, the price has also stayed below the 200 DMA, which is now expected to act as a resistance. 


The market usually enters consolidation after making a strong move to one of the two sides. 

So, we expect Bitcoin to consolidate and trade sideways in the coming days, or even slightly push higher to first try and clear the 100 DMA, before potentially continuing for a retest of the underside of the broken triangle around $9,500. Before that, the bulls must find enough support to push through the horizontal resistance, the former support. 


BTC/USD daily chart
BTC/USD daily chart


On the downside, the lower horizontal support (the green line) is the first hurdle for the bears. More importantly, just below the horizontal support lies the 61.8% Fibonacci retracement, which is a major Fibonacci retracement zone. These two technical indicators together create a well built support block that is expected to provide strong support for the bulls. 

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