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Can Bitcoin Support Levels Hold?
Written by: PaxForex analytics dept - Wednesday, 26 September 2018 0 comments
Bitcoin Network Adds Biggest Block to Date
Over 9 months into the bear market for Bitcoin, there are signs of technological improvements in Bitcoin.
The average block size is 0.804MB and includes 1,609 transactions per block.
On September 5th 2018, block number 540107 came in at 2.260MB and only 230 transactions.
This was accredited to the implementation of soft fork Segwit.
Google Reverses Cryptocurrency Ad Ban
In October, Google will allow regulated cryptocurrency exchanges to advertise in the US and Japan.
Google plans to manually approve applications for a certificate to purchase Google Ads.
The company plans to lift the ban internationally down the road and plans to filtered out illegitimate ads which is expected to increase investor protection.
Crypto mining ads remain banned from the Google Play Store.
Bitcoin Speculators and Investors Keep Cool Heads
According to the latest analysis by Chainalysis, Bitcoin speculators and investors held on to their positions over the summer months in a sign that tolerance for new lows increased.
The latest report covered the period between May and August and now points that only a fundmaental change, for example in regulation or techmology related changes, will result in new mass moves.
Speculators held 22% of available Bitcoins and investors 30%, while the overall user base has increased from 2017.
Canadian City of Medicine Hat May Cut Off Power to Bitcoin Farm
Medicine Hat, approximate population of 60,000 and resource rich with natural gas.
Bitcoin mining farm Hut 8 occupies 4.5 hectares of land, 56 shipping containers with 180 mining servers and a total investment of $100 million.
24/7 mining operations and a positive impact on the local economy, but consumes more electricity than the city of Medicine Hat combined.
Mayor considers to cut off electricity to Hut 8.
Scalability Remains Crucial Issue
Bitcoin can currently process 7-8 transactions per second.
Major payment processors can do a lot more. For example, Visa processes 24,000 transactions per second.
While the new Lightning Network is expected to address scalability issues, it may fall well short of what is required in order for Bitcoin to be viewed as a competitor to current systems and services.
Let’s start with a quick overview of the current Bitcoin environment. The average block size equals 0.804MB and includes 1,609 transactions. It takes an average of 9.231 minutes to mine the block and the median transaction value is $249.68. The average transaction fee is $0.43 and the cost per transaction is $50. The size per transaction is 226 bytes per executed code. Not all transaction carry the same weight which explains why the largest block which was added carried a lot fewer transactions.
As Bitcoin appears to have stabilized, market participants may wonder about the following two aspects moving forward:
What are the next support and resistance levels to keep in mind?
What could cause a breakout or breakdown in the price of Bitcoin?
Since Bitcoin has stabilized, let’s take a look at what resistance levels traders need to look out for. The $6,890 level is a key pivotal area which can determine breakout or reversal. This is the level where Bitcoin’s secondary descending resistance level intersects its secondary ascending support level. The secondary descending resistance level has rejected price action on four separate occasions and therefore represents a major resistance
level. Since Bitcoin dropped below its secondary ascending support level, this actually turned into yet another resistance level for Bitcoin which has rejected price action in its most recent downturn.
Looking at the chart, a head-and-shoulders pattern has emerged which is a bearish chart formation. This brings us to the next support level for Bitcoin which is located at $5,675 or the intersection between secondary descending resistance level and its primary ascending support level. A breakdown will take price action to the $5,204 mark which is the intersection between Bitcoin’s primary descending resistance level and its primary ascending support level.
In order for Bitcoin to breakout and eclipse its bearish pressures, a big fundamental change needs to be announced and implemented. While certain factors can develop rather fast, it is unlikely that Bitcoin will receive a dose of positive fundamental news in 2018. The landscape continues to remain vicious for those who envision Bitcoin as the money of the future. Those who seek to profit from cryptocurrencies should look for ways to sidestep this bear market and diversify their revenue stream by using volatility in Bitcoin to their advantage. PaxForex offers cryptocurrency traders a great mechanism in order to benefit from cryptocurrencies as well as the forex market.
3 Reasons Why Diversification is Important
Diversification shields investors from single events which can destroy an entire portfolio. Just rewind the past nine months and see how a portfolio could have performed if not all cash was stored in Bitcoin.
Diversification creates opportunities across asset classes which are not correlated. This allows investors to earn money in one sector while another one is depressed. Long-term this can accelerate portfolio growth and increase the overall revenue stream.
Diversification allows for growth in the prime asset. Bitcoin can remain the primary aspect of the portfolio, but by simply buying and holding a lot of opportunities are missed. Using diversification across asset classes, the proceeds from one asset class may be used to add to the core Bitcoin portfolio.
Can Bitcoin Support Levels Hold?
Overall bearish pressures outweigh bullish sentiment and therefore it will be important to monitor price action once it approaches support levels. Unless there will be a fundamental change, it is expected that current support levels will fail and that a breakdown in price action into the $5,675 area will follow. This is not a figure where Bitcoin will pivot, but has been identified by a forward looking technical analysis and remains an area where different factors clash and a change in price action is possible. Any price spike may be limited to the $6,890 mark where heavy resistance awaits Bitcoin.
As long as the current bearish trend remains in place, Bitcoin traders are recommended to use part of their digital assets and sell the rallies with a twist. Rather than exchanging Bitcoin for a fiat currency, a deposit into a PaxForex trading account with Bitcoin is recommended. Traders can then either trade fiat currencies on their own or take full advantage of the trading recommendations offered by the PaxForex expert analysts who work tirelessly in order to identify profitable trading opportunities. Once price action in Bitcoin approaches solid support levels, the earnings from the PaxForex account can be used to purchase more Bitcoin in order to continue to build the base. Through PaxForex, traders can create two independent revenue streams and growth their assets through a smart connection.