Bitcoin Price and the Lower Reaches

Yesterday was a terribly brutal day for the bullish traders among us. There was a massive selloff over the weekend and price has dropped $20. I thought this might frame it well:

“There was a time when my parents had to sell off a plot of land so that I can buy a rifle for competitive tournaments. After that we stayed in a rented house for the next 15 years.”

Gagan Narang, an athlete, said that back in the 1980’s and I think it is still fairly relevant: if you sell, it can have unforeseen consequences, often for the worst. I will be honest here, I consolidated and closed some of my portfolio’s positions into USD before the sell off hit and I am not afraid to admit it. It is said that a picture is worth a thousand words so here is a well designed if slightly depressing chart:

Coinbase Exchange (1 hour)

There were some small favors today with a countertrend respite from pressure thanks to the US dollar and its subsequent push into cryptocurrency space. So recently the key market support band at $220 was negatively breached in an instantaneous moment during the recent selloff; unfortunately this likely means that there will be a market retest near $210 sometime this summer. It might be in the near term that price hits near $210 but I think the more important level is near $200. If we can stay above these levels and allow more solid upper support to become established then the market can truly move with confidant bullish momentum and I think everyone will be glad to see a bearish relaxation. That said, if $200 is retested and support levels cannot be established, there could be a new target low below $200 and could be near the $170 level we saw earlier this year.

Let’s get to a more indepth technical, here is the 15 minute chart:

This is a better view of the massive sellout, look at all the red, it is kind of like a murder scene! Since the market was saturated with sells there is now some near term bullishness as price has moved back into more sell-side liquid stability. The first target to look at is the 50% Fibonacci retracement keyed in at $231, the same place where a resistance band has formed. Beyond this level, on target earnings are level at $236 for a potentially lucrative short position where filled volume could level out with various points of control (PoC’s). If the price range can shift back into $234 to $236 then I would recommend short trade positions there a low target near $200.

Today’s food for thought is “enterprise value” or EV for short:

“Enterprise Value, or EV for short, is a measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization. The market capitalization of a company is simply its share price multiplied by the number of shares a company has outstanding. Enterprise value is calculated as the market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents. Often times, the minority interest and preferred equity is effectively zero, although this need not be the case.”

The formula to calculate EV is equal to the market value of (common stock) + (market value of preferred equity) + (market value of debt) + (minority interest) – (cash and investments). Enterprise value is something that does not necessarily matter to the average investor or trader but it is something to consider for research purposes. Often EV is mentioned on investment reports and disclosures and I would say that it is fairly important for all the different bitcoin startups and companies that have mixed assets (multiple cash currencies, stocks, cryptocurrencies, and so on). Watch for my coverage of the bitcoin ETF in the coming weeks where EV is sure to play another role, happy trading!