Bitcoin Price: Attractive Volatility

Some people might talk about bitcoin and price volatility, let’s face it: this is one of the favorite things people like to say about it. Immediately following they might say something like “… and that is why it will never be adopted”; that said, I am overjoyed to say that this has not been the case at all over the past two months! The price range over the last couple of months has been within $20, with a low of $220 and a high of $220 relatively speaking, and a 10% price threshold is definitely noteworthy. In fact I would be more concerned about market uptake and usage with the lack of volatility; this is especially true since volatility is a market force that draws speculative traders into the fold and can provide immense levels of liquidity. When the market has more players, we have a cycle of boom and bust that allows there to be trading opportunities for growth with some risk. I am certainly not alone in this observation and I do not think that the price movements are over but only the market knows when it will happen again.

Indeed, if there is a price breakout in the near future volatility like back in 2012; beware, this is major level speculation but hey we have to plan for what could be. Let’s take a look at the one hour mark:

For today’s technical I selected the one hour mark since it has some good perspective for a medium term view. There is some oscillating price bounce between 50% and 62% Fibonacci levels, further confirmation that bullish momentum has held strongly and may continue despite the bump in sell orders in recent days. If this price region can hold and the bullish retracement can continue, there could be a higher localized low; stay with me, I know that’s an odd phrase but I am definitely getting to the good stuff. With an increased local low price could hit above $250 finally and I think we could all appreciate a market bump back to these levels. Acquire low! Anyway, if I was to guess I might say that the current price trend may retest a low into $220 in the short term with an eventual upturn with higher support levels around $250. I have made similar predictions in the last few weeks and the market has not always followed my will; surprise, surprise!

If the market does not follow a predictive model or analysis then you need a better model or it is just that a diverse and complex market may do what it may. Perhaps the market is trying to tell all of us that the recent downtrend is soon to close and the bearish twilight has come to pass, that something new and hopefully upward is coming our way shortly. I will not be the first to admit this but this is speculation, pure and simple. We will need to wait for any technical indicators and work the usual analysis to check this speculation but I think that at this point it seems more possible than it has over the past several months. That said, I would like to remain neutral on any official trade recommendations at least until the market can break through $230 and the trend line runs parallel to $240. I suspect that the current sideways will continue for the early part of the week and that some volatility will return towards the middle of the week. Market action could also subside again on the weekend, as it has for the last several weeks, especially since the United States has a long weekend.

Today’s word is the rule of 70:

“A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate the number of years for a variable to double, take the number 70 and divide it by the growth rate of the variable. This rule is commonly used with an annual compound interest rate to quickly determine how long it would take to double your money.”

This is a really, really important investment tool for any trader that wants to experiment with trades over the long term without actually buying yet. It is especially useful with annually compounded growth systems and how long it may take to “double” your initial investment. Buyer beware: it is a fairly simplistic approach and it amounts to largely a “back of the envelope” class of computation and is only a small part of investment. Happy trading!