After unexpected dumps to a low of $365 Bitcoin is making a nice road to recovery as it’s current price is hovering right at the $380 level. Some of the upward pressure may be attributed with today’s announcement that Bitcoin Classic has been released, suggesting contrary to popular belief that Bitcoin isn’t dead.
#Bitcoin Classic tree tagged for the first beta ("classic-0.11.2.b1")
Source code is out there. Binaries/release soon.— Jeff Garzik (@jgarzik) January 29, 2016
Looking at the github shows Bitcoin Classic will change the blocksize to 2MB, the earliest time the fork can happen will be March 1st, 2016. The fork will need 75% of the hashpower to agree in order to reach consensus and successfully start mining Bitcoin Classic blocks.
The release of the Bitcoin Classic code is an important step towards scaling Bitcoin to be able to handle today’s users, after March 1st if more than 75% of blocks mined have the Bitcoin Classic flag on the fork will take full effect and any blocks which are not Bitcoin Classic blocks will get dropped.
In our last technical analysis we found a triple bottom trend after the latest round of dumping which signaled a bearish trend reversal. While no breakout occurred the price did bounce off the third bottom for about 12 hours, followed by further dumping. An interesting idea was presented by kosai19 from tradingview. Taking a look at the 24 hour chart on bitcoinwisdom we can see a positive divergence forming:
Divergence is a signal of major shifts in the direction of the price and forms when a stock’s price price moves in one direction while it’s RSI or OBV moves in the other direction. Positive divergence is when the price of a stock goes up while it’s indicator decreases, which is precisely what has been happening with Bitcoin in the last few months. Since Bitcoin has been suffering from a major bear market since the beginning of 2016, upward movement as a result of this divergence is expected.
On the other hand, since Bitcoin’s price has been breaking through most technical indicators suggests that the market has entered a state of turbulence. Furthermore, a user has contacted OKCoin and confirmed that they will be adding Ethereum in February.
This means that more investors might sell their Bitcoins and buy into Ethereum hype, causing a further price decline. A word of advice is be very careful into buying into a coin while its being hyped up as usually it is already too late. Nonetheless, those are great news for Ethereum investors as the price is likely to rise after the addition. If the market keeps falling past the $370 support line we may see prices as low as $330 which will bring us back to last November’s levels.
Undoubtedly it is much safer to sleep in fiat during these times of volatility, however, if you are a risk taker now is a good time to open either a long or a short position as the positive divergence signals major price movements. The current RSI (Relative Strength Index) is 41 which is one of the lowest it’s been this month. The current OBV (On Balance Volume) is 445 which is also once of the lowest its been this month.
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