Bitcoin Rebounds $1000 Off The Lows

Update 1200ET: Bitcoin has rebounded over $1000 off its lows, breaking back above $10,000...

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Having rebounded after the BitConnect headlines sent prices plunging, cryptocurrencies are more sedately limping lower this morning with Bitcoin dropping back below $10,000. The question on everyone's mind, did the bubble just burst or do you BTFD?

It's been an ugly week for cryptos...

With the heatmap a sea of red...


... And Bitcoin back below $10,000:

... down 50% from its all time highs.


Bitcoin broke its 100DMA - which has acted a broad support in the last year...

And Bitcoin Futures at the lowest since inception on heavy volume (note that Bitcoin spot topped as CBOE unleashed its futures contract)...

Notably - today is the expiration of the first CBOE Bitcoin futures contract. CFTC reports a 1907 contract net short position (around 9500 Bitcoin short) and one wonders what impact that is having on the market today)

Bitcoin is now flirting with the key 9,978 support level, which Goldman yesterday noted is critical for the future level of bitcoin.  As Goldman's chief technician wrote, "Watch for signs of a base ahead of 9,978. Setup weakens through 9,836. Turn neutral/cautious through 7,882."


Which means buyers materialize or it's all downhill from here.

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Piling on, during his earnings call this morning, Bank of America customers are welcome to buy Bitcoin and other cryptocurrencies, just not through the lender’s Merrill Lynch unit, Chief Executive Officer Brian Moynihan said.

“We have limited our relationships and I think the thing speaks for itself,” Moynihan said Wednesday on a call with reporters after reporting fourth-quarter results.

“We’ve basically told people that they could buy it in other accounts, but not at Merrill Lynch. And so it’s just our view that customers should be careful here.”

Merrill Lynch told employees last month not to offer clients Grayscale’s Bitcoin Investment Trust, one of the few financial instruments directly holding the digital coin. Moynihan said Wednesday the bank is concerned with not being able to identify who’s buying and selling.

Which led Bloomberg  to ask the question: Will the cryptocurrency go down as one of history’s most infamous bubbles, alongside tulipmania and the dot-com craze?

In a follow-up to our post from a month ago, Bloomberg looks at where we are now relative to 'the big bubbles'...

As the chart shows, the cryptocurrency’s nearly 60-fold increase during the past three years was truly extraordinary.

The magnitude of Bitcoin’s boom (before it lost as much as 48 percent from its Dec. 18 high) suggests investors have reason to be worried.

However, Bulls say that Bitcoin’s boom is far from over, and that there’s more to analyzing a market than just measuring price gains. While the recent tumble has alarmed some investors, the cryptocurrency has bounced back from several previous swoons exceeding 50 percent. If Bitcoin did become a widely-accepted form of digital gold, as predicted by Cameron Winklevoss of Facebook fame, it could have a lot further to surge.

There’s also more than one way to slice a rally. On an annualized basis, Bitcoin’s three-year rise has been slower than the gains seen during several of history’s biggest manias -- most notably the Mississippi and South Sea bubbles.

Still, skeptics abound.

Howard Wang of New York-based Convoy Investments LLC and Jeremy Grantham of GMO LLC have analyzed Bitcoin’s advance relative to past frenzies and concluded that it’s unsustainable. Grantham, who helps oversee about $74 billion as GMO’s chief investment strategist, summed up his concerns in a Jan. 3 letter to investors:

“Having no clear fundamental value and largely unregulated markets, coupled with a storyline conducive to delusions of grandeur, makes this more than anything we can find in the history books the very essence of a bubble,” he wrote.

However, as CoinTelegraph notes, although it’s not hard to find plentiful online resources asserting there’s no doubt Bitcoin is a huge bubble soon to burst, some people provide alternative views. One of them is Ben Davies, co-founder of another cryptocurrency called Glint. He thinks people are not looking at the bigger picture of Bitcoin, and that’s causing them to incorrectly see it as a bubble.

Davies also thinks the way people often compare Bitcoin to the bubble associated with tulip bulbs doesn’t hold water. He notes that although the prices of tulips soared then experienced a sharp downturn, that historic event is a "poor comparison." He asserts the price increases associated with tulips were not similar to the cryptocurrency phenomenon.

However, even Davies admits Bitcoin “has all the hallmarks and antecedents that are the precursor to a bubble.”


RAT005 Ramesees Wed, 01/17/2018 - 11:40 Permalink

Don't forget, none of this panic selling settles without the miners doing their work and with the falling price of BTC that is the death spiral engine for BTC.  Ever increasing cost to settle transactions for an ever decreasing asset value.

There will be "news" that BTC has too many limitations and will be thrown under the buss.  The next Crypto will be much better!!

In reply to by Ramesees

HenryKissinger… RAT005 Wed, 01/17/2018 - 11:54 Permalink

didn't Davos 2018 debrief their minions to kill crypto?

"Every digital payment service should abide by KYC and cooperate in all law enforcement initiatives regarding cybercrime conspiracy, or it should be shut down. .. Virtual currencies who refuse to know their customers or freeze accounts of those engaged in criminal conspiracies should be subject to Treasury Executive Office for Asset Forfeiture (TEOAF)."

In reply to by RAT005

wise_owl_says... JimmyJones Wed, 01/17/2018 - 15:09 Permalink

who cares if its up 1000%, exchanges / sites are locked up or offline right now. miners will start shutting down, not able to collect outrageous fees. shitcoins will go dark in domino fashion as energy prices skyrocket. stupid plebs should have just bought simple silver coins that don't require a multitude of splash screens, emails, and passwords to stash away. a bright blue light special going unnoticed, cheapest real asset purchase of this millennia.  i feel great relief during this crypto massacre because i have lots of shiny precious at various lake bottom locations.

In reply to by JimmyJones

RAT005 Bay of Pigs Wed, 01/17/2018 - 12:31 Permalink

If the chart pricing is coming from an actual exchange of BTC and not the futures, than yes the TA is pretty meaningful.  Gold doesn't work because the price is manipulated to print the chart.  When they need a double top, they print a double top.  When they need a failed rising pennant they print one, cup and saucer, moving average crossover, etc.  Very easy to make computer models to calculate what prices are needed to print those charts and then just sell as many paper contracts as necessary to generate the necessary prices.

TA is just a mathematical approximation of psychology.  The chart doesn't define future price movement, it estimates current and immediate future psychology that gives a good educated guess of future price movement.  When the price action is real customers exercising their fear and greed it works pretty well.  When the chart is a computer output to trick people what current buyers and sellers are thinking it doesn't work.

In reply to by Bay of Pigs

GoinFawr Bay of Pigs Wed, 01/17/2018 - 13:05 Permalink

Up until Dec.18 of last year TA worked for BTC, just like it did once for gold.

And Gold has always had something BTC will never have (beyond mathematical certainty) : 'fundamentals', for what those are worth when faced with the spawn of Blythe Masters' Monsters.

At least that is what I am saying. And yes Bay', I am an old timer, no need to rub it in.

In reply to by Bay of Pigs

Antifaschistische dark pools of soros Wed, 01/17/2018 - 11:24 Permalink

perhaps...but at this point, you're going to need to find a new crew of buyers.   The million guys who dropped a $1,000 into crypto's are getting washed out.  They do not tend to come back...and they tend to scare their buddies off too.  So, we need fresh meat.

I recommend moving down to the elementary school level for new traders...since, the level of rational being used to drop life savings into x-coins can't get any stupider. 

In reply to by dark pools of soros