Bitcoin Poised for Multi-Week Rally;

07/13/18 The Bridge – Currency Competition:

“In keeping with the objective for Bridge publications, another market – that is not part of our normal publications – deserves an update as it enters a decisive and pivotal time frame.  That is based on multiple factors, all of which argue that Bitcoin is at a critical inflection point, when a new rally could begin.

That conclusion is based on several factors, including technical & cyclical analysis, geopolitical & economic factors and ongoing currency competition.  Those factors include:

— Multiple longer-term cycles pointing to a bottom (at least a 1 – 2 month low and potentially longer) in July 2018.  Among other cycles, that would occur 360 degrees from the decisive July 2017 low.

— Mid-year period (mid-June – mid-July), when many markets will set an intra-year low IF they set highs in the early weeks of the year (as Bitcoin did).

— An ongoing 8.5 week Cycle Progression (see illustration in adjacent column) that projected a bottom in late-June/early-July.  Bitcoin has initially bottomed in perfect sync with that intermediate cycle.

— A 144-day low (Sept. 14, 2017) – low (Feb. 5, 2018) – low (June 29, 2018) Cycle Progression that was just fulfilled with Bitcoin’s June 28 low…

Twins Separated at Birth?

The correlation between Bitcoin and the Yuan, since Jan. 2017, is even more consistent with both ‘anti-Dollars’ surging for 11 – 12 months and then both ‘anti-Dollar’s crashing into late-June/early-July 2018.

The correlation becomes more noteworthy when the magnitude of those declines – as a percentage of their previous advances – is taken into consideration:

Bitcoin surged from ~900 to ~19,000+ and then plummeted ~73% to its recent low (~5,800).

The Yuan surged from 1.4400 to 1.6020 and then plummeted ~73% to its latest spike low (~1.4840).

In fact, I might call that uncanny… not just noteworthy as the two move more and more in tandem.

Ironically, it was the actions taken by China in late-2017 and early-2018 that first unnerved and then undermined Bitcoin.

However, that may be a partial reason for the close correlation between the Yuan and Bitcoin…

‘Anti-Dollar’ Dichotomy

In late-2017, 80 – 90% of cryptocurrency trading volume is alleged to have occurred through China.

That is an obvious reason why the government became more and more uneasy with that overheated market.  Recent estimates place China’s involvement in the crypto-market (now) at about 1%.  Mission accomplished!

In a classic parabola formation, China’s early announcements regarding Bitcoin and cryptocurrency – emerging in Sept. 2017 – sparked new interest and may have contributed to the accelerated advance leading into mid-Dec.  (Ethereum did not complete its related ‘bubble’ until mid-Jan. 2018.)

And then, just as abruptly, Bitcoin collapsed – leading into China’s final actions (ban) in Feb. 2018.

Some have speculated that China’s actions are a primary cause of the acceleration seen in late-2017 (a little like when gun sales skyrocketed in the hysteria after Obama was elected President)…

After all, if crypto-advocates see their blockchains as the antithesis to an over-reaching government, how would they respond if a major government begins to ‘overreach’, at least in their view?…

What Now?

Bitcoin has fulfilled its 3 – 6 month downside price objective – attacking the critical 5,500 – 5,800 support level multiple times.

Although its intraday low was closer to 5,500, Coindesk shows the Nov. 12, 2017 low (daily close)  – the 4th wave of lesser degree support and ’start of the extension’ – to be 5,857.  On June 28, 2018, it shows the low at 5,848.  That’s pretty close!

Bitcoin has also fulfilled multiple cycles – daily, weekly & monthly – that have anticipated a low in late-June – mid-July 2018.  That is also the ideal time for an intra-year low.  So, a bottom is more likely.

From a time and price perspective, Bitcoin is in the ideal range for a multi-month bottom to take hold.    The first confirmation of that would be a rally above – and daily close above – 6,800.

That would then project a rally back to ~7,800, the second level of pivotal resistance…

The risk?  If Bitcoin convincingly breaks below 5,500, it would reflect an even more bearish structure and could trigger a blow-off decline to ~3,200.”

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Bitcoin has tested decisive support and the 3 – 6 month downside target (5,500 – 5,800), stemming from its mid-Dec. ’17 peak.  It fulfilled early-May analysis, for another wave down, and could now see a substantial rebound in the coming weeks.

Recent action reinforces the significance of the 5,500 – 5,800 support range that is likely to hold for a few months.  If that is broken, ~3,200 becomes the next level of support.  That was the mid-Sept. low from which the parabolic rise into mid-Dec. emerged.  The ~21-Week (144-day) low – low – low Cycle Progression should produce one more important low in late-Nov. 2018.

Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.