Price analysis: Bitcoin continues to trade sideways

Trading
October 22, 2019

Financials 

The financial services provider Fidelity is expanding its cryptocurrency custody and trading business, expecting to reap the rewards from its new platform Fidelity Digital Assets, said Abigail Johnson, the company’s CEO.

The platform was originally supposed to be launched in the first quarter of this year.

“Fidelity started adding clients in the first quarter and is now engaged in a full rollout of its custody and trading services for digital assets — a boon to what is a fragmented and complicated industry,” said Johnson in an interview with the Financial Times.

It was reported that Fidelity’s new business platform was being tested by a small number of customers such as hedge funds, family offices, and financial advisors related to the crypto world. Fidelity announced the launch last year expecting to provide “enterprise-quality custody and trade execution services.”

The Boston-based company which manages $2.8 trillion worth of assets is one of the first of its kind to provide cryptocurrency custody services, while its rivals are still skeptical about how the crypto industry will grow in the coming times. 

Nowadays, there are a few other platforms offering the same services, however, Fidelity is a leader when it comes to the customer base and network.

Ms. Johnson mentioned the digital currency exchange, Coinbase, describing it as “a company that most people had never heard of, and they don’t have the existing relationships with the independent advisers.” 

Elsewhere, the bitcoin-mining startup Layer1 said it has raised $50 million from entrepreneur Peter Thiel and will carry on with its business plans, including operating its own power sub-station and buying solar and wind energy.

The company will produce the energy on its facility in West Texas which will be based "literally in the middle of nowhere,” said the company’s co-founder Alex Liegl. The plant will utilise modern cooling technology used to mine Bitcoin.

"We expect our chips to be competitive for at least eight years now. You want to have your own chips in hand. We also have our own electricity substations: effectively that's as close you can get to owning your own power plant,” said Liegl.

Bitcoin mining facilities are usually located in colder areas in order to protect the technology from overheating, but the San Francisco-based startup thinks that its cooling technology is powerful enough to prevent that from happening. Texas is also famous for providing light regulation and cheaper power.

Today, BTC is worth about $8,300 and as a part of its mining system, miners contest to win a reward granted nearly every 10 minutes. The current reward is around 12.5 Bitcoin and that number will be cut in half next May.

Technicals

On the technical side, not much has changed since last week’s blog post. The Bitcoin price action is still trapped within a rectangle. In case we still trade within the rectangle by the end of the week, it would mark the fourth consecutive week of consolidation. 

 BTCUSD 4-hour chart (TradingView)
 BTC USD 4-hour chart (TradingView)


Given the fact that bears had failed in three attempts to break the $7,750 support in the previous weeks, we may see a push higher to test the descending trend line, which represents a very important resistance for Bitcoin. The trend line currently coincides with the major horizontal support around the $9,000 handle. 

The bullish sentiment, near-term, may be lifted by today’s break of the 100 MA on a 4-hour chart, which is now expected to provide the support to bulls. The 200 MA on the same chart sits between the 100 MA and the major resistance block around the $9,000 handle. 

Furthermore, the 200 DMA comes just above $8,800. All in all, the zone around $9,000 marks a mountain of resistance for the Bitcoin bulls.

On the downside, the story remains the same as well. A break of the $7,750 support is likely to pave the way for the test of another important horizontal support just below the $7,500 mark. In addition, the major 61.8% Fibonacci retracement of the 2019 move higher comes at $7,250. 

Look for the world’s biggest digital coin to trend between these two important blocks in the coming week. 

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