The digital asset industry is 2 weeks into the final quarter of the year, and the bullish bells are starting to ring for Bitcoin. After a rather disappointing start to October, the largest digital asset has managed to pick up its pace and attain a strong position above $11,000.
While certain proponents might remain bullish in the space for endless reasons, In 2020, Bitcoin’s supply structure has registered tremendous alterations which may indicate the rising impact of its scarcity.
Right now, the supply compression of Bitcoin is a major talking point because of the difference seen at present time with respect to 2019, when Bitcoin was at a similar price point. The above chart indicates that the active supply is currently tightening, with more than 63% of the supply being dormant over the past year.
Another important factor in play remains the Bitcoin Days Destroyed, which accounts for the estimated transaction volume or ‘velocity of money’ flowing in Bitcoin. At the moment, BDD is halved in comparison to its standing back in 2019, which suggests the heightened levels of HODLing.
Additionally, the increase in unique addresses also helps the narrative but the changing Macro-Economic backdrop is possibly going to make all the difference for Bitcoin for the rest of 2020.
Bitcoin, Supply Compression, Macro-Economic background; Where is the commonality?
In order to cover a common base, the traditional financial landscape is under intense scrutiny, which amasses possible inflation and degrading GDPs. According to a recent report, the Bank of England is currently approaching other banking institutions if they are ready to adopt negative interest rates.
It would be the first time in 326 years, that banks will incur negative interest rates which will significantly harm the profitability of accredited banking institutions. Amidst such economic turmoil, the U.S Federal Reserve was also considering ‘near’ zero interest rates. Zero-interest rates indirectly devalue the nation’s currency and there would be a lack of foreign investment.
While joining the dots directly to Bitcoin‘s gain is a little misleading, there wasn’t much against it either. With major institutions warming up to the idea of investing in the digital asset, Bitcoin’s strong credential at the moment is only providing the rest of the market another option to hedge against a potential economic collapse.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 12,257.10.
The projected lower bound is: 10,799.00.
The projected closing price is: 11,528.05.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.
A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.
A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend (which appears to be the case with FOREX BTC=) it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend it is called a bullish hammer.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 68.3897. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 61.59. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 70 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 90. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 9 period(s) ago.
Rex Takasugi – TD Profile
FOREX BTC= closed down -21.440 at 11,522.920. Volume was 87% below average (consolidating) and Bollinger Bands were 12% narrower than normal.
Open High Low Close Volume 11,542.000 11,551.250 11,428.250 11,522.920 86,494
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 11,245.46 10,836.58 9,735.45 Volatility: 39 42 55 Volume: 339,728 595,130 573,138
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX BTC= is currently 18.4% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods.
Our volume indicators reflect volume flowing into and out of BTC= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on BTC= and have had this outlook for the last 19 periods.