Is Bitcoin About To Soar?



For now only a small fraction of the eligible potential Chinese bitcoin users have emerged. Even so, bitcoin is now double the price where it was when we wrote the above forecast.

But what if just like every other market, fundamentals only matter to a certain extent, and what is far more important is the algos scanning for patterns and creating self-fulfilling chartist prophecies.

In other words, what if the Bitcoin technicals are far more important? Then we may be about to see a major breakout to the upside. As Dan Eskola writes, "a large move in bitcoin" is imminent.

He explains why:

A "Bullish Pennant" is a buy indicator. It exists here since the price action in October 2015 was bullish. Since then the prices have stabilized somewhat but have not sold off or broke out higher. Bitcoin prices are searching for direction.

The long term chart also shows some common characteristics.

Fundamental analysis is great, technical analysis is easy. The following fundamental bullish factors indicate that the prices for Bitcoin are headed higher.

  1. A finite number of Bitcoin will be mined.
  2. Central bankers are convinced inflation targeting is the correct policy action to promote price stability.
  3. Capital controls in struggling economies are creating new users of Bitcoin.
  4. Easier to transfer than Gold, the traditional inflation hedge.
  5. ETF $COIN seeking regulatory approval will expand market awareness and offer another vehicle for investors.

I believe the market participants that price Bitcoin use technical analysis because it is easy and fundamental analysis is difficult. I believe that Bitcoin prices will move higher for the rest of 2016.