Yesterday night bitcoin finally broke two month strong upwards support in Chinese exchanges. It didn't fall further at that time because movement was stopped by Microsoft acceptance of bitcoin, so instead it rallied +10%, after doing the first lower low in the 4H chart.
While this news are good for longterm bitcoin adoption, it means nothing else than a Pump&Dump in the short term as it happened with Paypal and Dell adoption news. As this is a way to cashout bitcoin, not to buy them. It will give more bitcoin awareness, but potential buyers won't be tempted to buy any time soon until it finish this long bear trend.
We also need to add that Bitcoin fundamentals are quite bad at the moment for the short/mid term: - 94k bitcoin will be auctioned in the next months by US Marshalls. - 30k extra bitcoins also auctioned by Australia soon. - 200k recovered frozen bitcoins from MtGox could be returned to their owners at any time. - Less bidders in the recently 50k auction, was also really bearish sign. - Localbitcoin closing their services in Germany. - Bitstamp running out of liquidity and with an extremely thin orderbook. - Big bottleneck in the fiat entries. Won't be resolved until proper regulated bitcoin exchanges or ETFs hit the market. - Finally, as I mentioned before 2 month support was strongly broken yesterday night, plus it did the first lower low.
So, overall I think it is a really great entry point to short, taking advantage of the Pump&Dump.
First target should be around 2000 CNY and 1900 CNY, but as bitcoin is breaking down again strong support we could see more potential dumps, down to 1800 CNY or even 1500 CNY. Of course this last targets could take 1-3 months to develop as bitcoin movements are slowing down.
i completely agree. shorted @ 360 finex last night as you saw on my twitter. very professional analysis.
DoctorBitcoin
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We already hit the first support zone at around 1950 CNY, Congrats! I draw It a bit lower in the chart, by the way.
I was expecting a mid size rebound here, as it is the first stop before going to 1800 CNY and 1500 CNY, but it seems bulls completely left the building. As I'm expecting a big crash in the next weeks, all the way to 1500 CNY and I don't have much faith on a rebound here, I will just hold my opened short positions and add more in case we see a decent rebound.
Seems bulls wasted all their ammo in the last crazy rally to 3000 CNY, plus in the Microsoft Pump&Dump.
Also it is the first time a big "altcoin", Ripple, is in an extreme rally, while bitcoin is sinking in the opposite way. So, bulls decided to leave bitcoin to make "easy profit" in the other one.
Of course, if you plan to stay 24h behind the screen then you can try to catch the rebound, even if it is not very big. But in my case I'm just going to relax and easily follow the downtrend, it would be worse to miss the next big leg going down when we just started the downtrend than a small rebound without a lot of volume.
Good luck!
DoctorBitcoin
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DoctorBitcoin
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Confirmed! Two months uptrend is broken again with high volume. RSI support also broken. Microsoft news affected the price as expected, just a pump&dump.
This breakdown should led to a new downtrend for some months.
As a bear flag I will also add:
- Bitcoin was the worst 2014 investment, and media will start to hit hard in this fact for the next months.
Alone it would be a bullish sign, telling us bear downtrend is about to finish. But combined with all the other red flags it will move away all potential investors for a while.