The past week has been a historic week for Bitcoin as it broke all time highs over and over. As the week came to an end Bitcoin’s price peaked at $1623, followed by sharp decline and touching $1440. However, as the weekend approached it seemed that the massive volume has died down and the Bitcoin price achieved equilibrium between the $1500 and the $1600 zone. In this article we will discuss the potential future actions of the market and the reasoning behind it.
Why is the price rising?
As discussed in our previous article, the common assumption is that Bitcoin’s recent price hike is associated with the adoption of the cryptocurrency in Japan. In April, a law was passed in Japan which required all those selling cryptocurrency to register with the government. While it may seem that this new regulation would detract from Bitcoin’s popularity in the country, the opposite happened.
Since most of the volume during this peak originated from Japans Top 4 Exchanges, it is evident that this new legislature caught the interest of the larger more conservative investors. Furthemore, ever since the PBOC has been cracking down on Bitcoin in China, it seems that more bitcoin investors are moving to the flourishing ecosystem in Japan.
It seems that Japan has also shown interest in alternative cryptocurrencies, since one of the largest financial groups in the country are working on an altcoin of their own. According to the Asahi Shimbun:
Bank of Tokyo-Mitsubishi UFJ Ltd. will become the world’s first major bank to issue a virtual currency, which will feature low commissions for online exchanges or conversion into foreign currencies
The cryptocurrency will be named MUFG and the group is even developing ATMs which will allow users to exchange those coins for cash.
Future Market Action
Since there are no historical resistance lines that can be used to make any other analysis, it seems that the most popular techniques being used to predict the recent charts are Fibonacci Retracements. If all follows suit, the next Fibonacci level is right around the $1700s. While that may sound overly optimistic, remember that Bitcoin’s price rose over $100 in a matter of hours when the trading volume was pumping. Moreover, $1700 will serve as resistance and is not necessarily the level the market will stabilize at.
While it seems that nothing can stop Bitcoin right now, one thing to consider is how during such sudden rises the market can overheat and collapse on itself. After following Bitcoin news for over 3 years I noticed a funny pattern. As soon as you see posts on reddit about Bitcoin’s crazy price rise, the market crashes.
While it is never good to trade on patterns it is something to keep in mind. As traders get too greedy and start buying Bitcoin at unnecessarily high prices, the smart fish come in and take profits. As a reminder it is never good to trade on emotion, so if you are feeling FOMO or greedy make sure to recognize that.
Dislaimer: This is not trading advice, this article is for educational purposes only. If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.