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Bitcoin Price Analysis 28 September 2016

This week the mood around Bitcoin was frenetic and bullish, with great news coming out from fundamentals and price technicals. A Bitcoin report bumped up its Bitcoin price valuation to $850 citing improved fundamentals. Public blockchains also got a boost at the Global Blockchain Summit in Shanghai despite the massive proliferation of private distributed ledger consortiums. Bitcoin is back!

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Much of September has been sideways consolidation, as the chart shows above. A sudden run up to $630 on September 4th brought back excitement, but sold off sharply back to $590 lows. In hindsights, it is fair to call it a teaser, confirming that there is interest in buying. A $50 dollar rise over a week is potential for a move at least twice that.

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Price traded above $590 after selling off on September 21st from $608. The short term range is clear cut – $608 upper limit and $593 lower limit. Breaking $608 upwards will put us back in the $660 – $543 range. A consolidation in this range will correct the larger fractal drop: $778 top to $465 Bitfinex hack low.

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Price is at a finite point of breaking out after a triangle squeeze from June’s $780 top. The 100 day MA in blue would support a break low to $540 and would not invalidate further upside. A long candle wick rejection similar to August would reinforce further upside forecasts. Given the bullish forecasts from Needham’s report, and Bitcoin Core’s recent SegWit and Malleability fixes, a move up is a good bet.

Extending trendlines from as far back as 2013 points at likely targets on taking off from key price levels. September 5.png

The current support level on the weekly chart was a support level for a sell off from the all time high back in April 2014. Some weeks of consolidation followed, before a teaser preceded a retracement to the top resistance level. This double top failed to break further, and gradually sold off into the bear market lasting into 2015.If the current level holds, then a retest of the top resistance level is in order using long term support. Interestingly, the target of coincides with Needham’s forecast’s at $850.“$590 has been proven as a really strong support on all exchanges and we seem like we’ve almost broken the mini-downtrend/retracement. If we break about the 615$ within the next 1-2 days, we have a really good chance of breaking above the 640$ area.”

Bitcoin FundamentalsHyperLedger backs Currency Blockchains at DevCon Shanghai

The Global Blockchain Summit Shanghai attracted entrepreneurs from both sides of public/private blockchain divide – Ethereum, Bank’s R3CEV and Hyperledger – a linux/IBM. Brian Behlendorf, head of Hyperledger , backed open un-permissioned currency blockchains like Bitcoin. IBTimes quoted him“We want to work with public, un-permissioned currency-based chains. We are all interested in currency chains because we believe there are certain use cases that can only be met by those sorts of platforms.”

The success of currency blockchains is a plus for the underlying asset like bitcoin. Similarly, the development of blockchains become fundamental to its price.

Needham & Co. Bitcoin Report Bumps Price Forecast to $850

Needham & co. projects a valuation of $850 per Bitcoin, in a report published this week by the investment firm. The firm recommends a buy, bumping up its April forecast by 29%. The report, made revisions in lieu of recent Bitcoin Core improvements. Money Morning reported“its Bitcoin price prediction is based on three central ideas: that it is increasingly behaving like other investment classes; that adoption is accelerating; and that changes to the software itself will make it more useful.”

The conclusions of the analysis expects bitcoin to continue on an uptrend to $848. Needham made a great call in an April report forecasting $655; price was at $423 at the time.

Bitcoin Hard Fork Risk Persists

The price of bitcoin is at risk of a hardfork in the near future, a likely event of market turmoil, at least according to John Ratcliffe. On a lets talk Bitcoin 309, John a video games engineer confirmed Core is building Bitcoin to be a layer for other blockchains, drawing comparisons to challenges in game development.

Tension has simmered over the past year, with factions calling for raising the block size limit. 1 MB more of capacity will drive adoption. But the core development team is unanimously against adding more risks of centralization, as the miners already are in China. Adding capacity increases the blockchain to unsustainable levels for small nodes.

With $ 10 billion market cap on the line, any hardfork split could turn ugly, and there are lessons from the ETH/ETC split.

Bitcoin Weekly Price Forecast

This week I am bullish for the next 3 – 4 weeks, or as long as it takes to get to $750. No matter what happens this week, price is set to go up to $750 in the coming weeks. My only caution is of a shake out, on the way up. Shake outs happen before big moves, to shake out weak hands and pick up cheaper coins.

The first price level to watch out for is $660 on the upside. In case of a shake out, I expect $540 to be the lowest low and it would hold. A long wick candle would retrace up, so any lower lows are buying opportunities.

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