Bitcoin Price Analysis: Hyperinflation to push the price higher?

Bitcoin Price Analysis: Hyperinflation to push the price higher?

  • October 18, 2016
  • /
  • Deepak Bharadwaz

Second week of October has started off with a break out propelling the market to over $620 level. The bullish trend continued with the market trading all the way to $640 before turning sideways on short term frame. The market has traded scantily over the $620-$630 region with no good residual volumes. While the long term setup still looks bullish, let’s see if hyperinflation can push the prices higher for the coming week:

Fundamental Key Points:

The adoption of the cryptocurrency and its underlying technology has always been fundamentally positive for the Bitcoin ecosystem. Here are few highlights of the past week fundamentals that might continue to have effect on the prices:

  • Bitcoin Trading on LocalBitcoins surges in Europe to all time high, turnover in Turkey and Venezuela explodes due to hyperinflation
  • Japan to drop Bitcoin sales tax by 8%
  • SEC Seeks Additional Comment on Winklevoss Bitcoin ETF
  • Polish Parliament Holds Public Consultation on Cryptocurrency
  • The Russian Government is Testing Blockchain for Document Storage
  • Bank Trials Show India’s Blockchain Interest on Rise
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From a macro perspective, there has been an increase in the trading volumes of Bitcoin in countries like Venezuela that are facing hyperinflation. This is because of the devaluation of the local currency; people preferred to convert savings into Bitcoin.  Economies facing recession might opt this as a way out to save value. How SEC might react to Winklevoss’s ETF request coupled by hyperinflation effects might have impact on prices of the currency.

Technical Analysis:

 

long-term-daily-analysis

 

Long Term Trades:

The Long Term chart has been in an uptrend from the start of this year, with no sign of any set up change currently. The market has traded constantly over $630 with very low residual volumes in the range of $620 – $630. There is a strong possibility that the market might trade again in these levels to close the gap. This might be a chance to enter into a long term position around the zone of heavy support. The previous swing low of the market at $594 can be the stop with swing high at $770.89 as the target.

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To get apt entry positions for the long term trade, let’s take a closer look:

long-term-daily-closer-analysis

On the daily chart, in the recent period the market has been trending in a channel. Eversince market failed to penetrate the $594 price due to heavy support; it has been trending upwards with middle Bollinger as support. Taking a position at middle Bollinger around $624 with $594 as stop loss and target $770 would be an ideal long term trade that can be executed with good support.

Short Term Trades:

 

short-term-4-hours-analysis

On a daily chart, 100 SMA has now joined the zone of heavy support around $620, with the middle bolligner, 9, 13 and 34 SMAs. Market is looking to test this region before taking to the Bull Run.

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On shorter time frame (4 Hrs), the Bollinger bands have broken out and the market is bearish. All the support averages have been broken and market is moving towards 100 SMA. Good short term trades with 100 SMA as target and $640 as a stop on bearish side would be feasible. Since market could to be sideways in $620- $630 range, short term trading from both sides would be feasible for some period.

While taking long term positions, keeping an eye on macro factors would be really helpful.