CoinDesk’s analysis
The CoinDesk analysis was made before the Security Exchange Commission’s announcement was made. The article notes that early in the day the price of bitcoin had reached $6,899 on Bitfinex, the highest level since August 7. It was also accompanied by a sharp drop of 10 percent in the number of shorts. This type of pattern happened before the rally of April 12.
However, the analysis warns that the price could crater if the SEC rejected the applications for exchange traded funds (ETF) This did happen later in the day as the SEC rejected nine applications in all. The price did take a substantial dip but seems to recovering in what is now early on August 23 UTC.
The convincing move above the $6,600 mark is an upside break of the narrow price range bitcoin had been trading within. It signals a continuation of the rally from the low of $5,859 on August 14.
The CoinDesk article was published at 11:28 UTC. At that time, BTC was trading at $6,670 up 3.6 percent over 24 hours. However, by 22:19 the price had slumped to $6,281 over 600 dollars down from the earlier high. The price has recovered some since.
Chart analysis
The 4-hour chart shows that there has been an upside break of the diamond pattern which confirms a bearish-to-bullish trend. This would indicate the sell-off from the July high of $8,507 is at an end with the bullish tendency now ascendant. The relative strength index (RSI) is now above 50 also a bullish sign. The 50-candle moving average (MA) is rising and could soon cut through the 100-candle MA from below a further bullish sign.
The rise to $6,899 shown on the daily chart confirms the crossover between the 5-day and 10-day MAs a bullish sign. There is also an upward sloping RSI. However, the article notes that BTC’s price had already dropped about 50 percent of the gains it had made so far today. This validates the skepticism surrounding the rally. The SEC announcements resulted in a further spike downward. The retreat back to $6,670 marks a failure to retain gains above the key resistance level of $6,870.
CoinDesk’s Outlook
Based on its analysis the CoinDesk article predicts: “BTC’s bullish breakout has proved to be lacking in staying power. That said, acceptance above $6,870 (Fibonacci hurdle) could boost the odds of a rally to $7,000. On the downside, a move below $6,230 (Aug. 20 low) would shift risk in favor of a drop below $6,000 (February low). The SEC’s decision on the bitcoin ETF could send prices either way, but until then the market will likely trade on a cautious note.
Present situation
The SEC”s decision can be found here. In all the SEC rejected nine different ETF proposals. The reasons for rejection and even the wording were basically the same in all cases. The wording in the rejection of the ProShares application is: “…the Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”
While the announcement helped create a drop of over six hundred dollars from the early high in the day, by closing time there was a minor recovery. The BTC price opened at $6,357 with a low so far of only $6,348. The high up to now has been $6,426. At 02:17 on August 23rd BTC is trading at $6,422 not far off the high but then most of the trading day is still to come. While the direction is not certain it appears that the negative effects of the SEC announcement were unable to drop the price below the $6,000 level but perhaps that could change later today. For now the tendency appears for the price to recover from the sharp drop late yesterday. The present price of bitcoin can be found here.
