Friday, August 29, 2014

Bitcoin Market Expected to Become Volatile

Bitcoin price action has, since publication of this week’s in-depth report, provided some clues as to what the market may do next. Price returned to below $510 today with a brief dip below $500 (on the leveraged exchanges) during the European market session.

A common wisdom in the market says:

“Periods of low momentum precede periods of volatility.”

The visual pattern is unmistakable – a contracting consolidation moving sideways. We’ve witnessed this pattern twice since the beginning of July, and its conclusion has been the same each time: a drop, as if over a cliff, and each time by at least $20 within an hour or two. At the extremes of each contracting wave price can be seen to equalize amongst exchanges, as shown in the snapshot on the right (BTC-e (top), BitFinex, Bitstamp and BTC-China (bottom).)

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