Ten percent moves in a matter of hours are now the norm for Bitcoin. Volatility is increasing as predicted. With nothing but technical analysis to guide the speculator, the moves from one line of resistance to another are swift. A big order to buy or sell trigger moves up or down. Everything is based on sentiment, and sentiment is easily manipulated.
The winners in all of this are the big manipulating whales, with masses of Bitcoin and cash, and the professional traders who know how to read data correctly. The losers are clueless newbies with no idea what they are getting themselves into. It is the emotions of the newbies that are manipulated. Their hands are shaken. They buy and sell precisely at the wrong times.
Some technical lines are rather obvious to see. They are the whole digits, like 9000, 10000 and 11000. Others are less obvious, such as 50% up and 100% up from a temporary bottom. Then, there are Fibonacci numbers that work well due to their pleasing relationships. (Remember, it's all about sentiment.)
Then there are the moving averages.
There are many different types of moving averages. However, they all have one thing in common. They tend to draw prices back towards themselves. A price that drifts too far away from a moving average that has worked well in the past, is likely to move back to the moving average in the future.
In the case of Bitcoin, the 200 day weighted average has been the line from which almost every dip in the past year bounced off of. That's why I predicted resistance against this moving average. It is presently at 10200, but appears no longer to be as strong as it used to be.
The bounce at around 6000 which marked the low point of the last crash a little over a week ago was around the 200 day simple average, which was then at about 8000. It may therefore well be the simple average that rules the day at present. If so, the weighted average will only provide temporary resistance before Bitcoin again falls towards the simple average, presently at 8300.
Note also, that the simple average was breached. Al the support lines, except for the psychologically important 6000 line were crossed for more than a day. That's a long time in Bitcoin land where everything happens at least ten times faster than in other markets.
Adding to this that, judging from Google Trends, no new suckers have been drawn into the game, the present bounce is off of the psychology of the newbies already drawn into the slaughter house. Once these are sucked dry, there will be little fresh blood for the whales and professionals. They will have to turn on each other. The only long term hope for them is therefore to keep the circus going. The price of Bitcoin must be manipulated high enough to again draw the enthusiasm we saw a few months ago. However, the odds for this succeeding, with so much blood now seeping out of the slaughter house for everybody to see, are rather slim.
By Alex Kofman - http://spotware.ctrader.com/c/XKB5n, Public Domain, Link
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