Bitcoin Price Starting to Reverse, 2 Catalysts Will Drive it Higher in 2018

Throughout 2018, Bitcoin has continued to record lower highs, testing major resistance levels at $10,000, $8,000 and $7,000. According to Fundstrat’s Tom Lee, the stability of Bitcoin at $6,000 regardless of its lower highs is optimistic.

In early 2018, Fundstrat emphasized in a report that the $6,000 level will likely be held by Bitcoin in the mid-term because it is the breakeven point for miners. That means, miners that utilize electricity and mining equipment to verify transactions on the Bitcoin network can still generate some profit if the price of Bitcoin stays above the $6,000 level.

Lee explained on Bloomberg that the stability of BTC at the $6,000 mark and two major catalysts awaiting BTC in the year end could push the price of BTC up substantially within the next two months.

Bitcoin daily price chart on September 30, provided by Coincap.io

“$6,000 is a level that is more important than we realized. Earlier this year, we were pointing $6,000 as breakeven for Bitcoin mining so that level should hold. The fact Bitcoin is holding here is very good news. I think there are catalysts in the year end so I think despite the lower highs we’ve seen I think we’re starting to reverse,” Lee said.
 

What are the Two Catalysts?

According to Lee, two major factors will contribute to the increase in the price of BTC by the end of the year: strengthening infrastructure of the cryptocurrency exchange market and fear of missing out (FOMO) amongst institutional investors.

Over the past few months, Bakkt, a cryptocurrency exchange created by ICE, Starbucks, and Microsoft, has been building the first regulation-focused platform that primarily aims to operate as a trusted custodian and brokerage for large-scale investors.

Eventually, with the entrance of major investment banks and solid products offered by Bakkt, Lee stated that institutions will have the ability to enter the market.

But, echoing the sentiment of billionaire investor Mike Novogratz who previously stated that institutions will likely not commit to the crypto market until Bitcoin surpasses major resistance levels at $8,800 and $10,000, Lee emphasized that Bitcoin will have to show some recovery in its price before it appeals to many institutions.

“I think there is a few. One, this new exchange called ICE Bakkt will be launched. It is going to be really one of the first regulated exchanges. I think around that, there is working being done by these major investment banks to build products to support it or work with it. I think institutions are waiting to be involved,” he said.

How Will Bitcoin End 2018?

In early 2018, Lee reaffirmed his price target of $25,000 per BTC. The cryptocurrency market is quickly approaching the end of 2018 and it is becoming increasing unlikely for the dominant cryptocurrency to reach an all-time high by the end of the year.

Still, given the stability of BTC at $6,000 since late July, it is possible for the asset to show strength and momentum by November and December, a period in which the cryptocurrency market historically tend to record large gains.

David

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All in all, Bitcoin prices are on an uptrend. Backing these are boosting fundamentals with investors anchoring their bullish hopes on Bakkt, the ICE subsidiary. The platform will make use of Microsoft technologies for expediency. Regardless, our previous trade plan holds true. Even with a modest three percent gain in the last week, we need to see strong gains above $7,000 or safely $7,200 for trend continuation. Thereafter we shall recommend large volume buys with targets at $10,000.

Latest Bitcoin News

At current levels, Bitcoin prices are not only vibrant but are bottoming up. Bitcoin prices are up roughly $500 from last week’s lows. Factoring in candlestick formations, it appears that there is more room for upsides thanks to spikes in market participation levels.

All eyes are now set on Intercontinental Exchange (ICE), the owners of the New York Stock Exchange. The ICE plans on launching a new regulated “on-ramp” platform for institutional investors, merchants and retail investors to trade, store and spend various digital assets through

All aspects of the existing futures market will, for the first time, be part of physical delivery and warehousing of Bitcoin

Bakkt will utilize MS cloud solutions with backing from traditional Wall Street companies and crypto funds as Starbucks, BCG and Fortress Investments. Once they get the green-lights, Bitcoin prices will likely on a high by the end of the year as investors rush to invest. In fact the optimism is so high that Michael Novogratz, the Former Managing Partner at Goldman Sachs said it is impossible for Bitcoin prices not to test $10,000 by the end of the year re-affirming his previous stands on price.

Bitcoin Technical Analysis

Weekly Chart

Though there is optimism in the market, our last Bitcoin trade plan is solid and on course. From the weekly chart, it’s clear that Bitcoin prices are on a consolidation. As they oscillate within a $1,200 range with supports at $5,800–$6,000 support and $6,800–$7,200 resistance level, our Bitcoin buy triggers would only go live once there are conclusive surges above the resistance trend line separating buyers and sellers at around $7,200—Sep 2018 highs. Besides the ranging market, the $6,000 level is proving to be a solid foundation for Bitcoin buyers.

After all, BTC sellers have so far retested $6,000, six times. Every time sellers fail to breach these resilient floors. Overly, this is good for BTC optimists. It goes to show how important $5,800–$6,000 level is from our analysis.

Daily Chart

Before Sep 18 surges, $6,500 or Sep 17 highs were our minor resistance level. Cementing our decision to anchor suitable stops and buy triggers at $6,500 was those high trading volumes of Sep 17.

Notice that average volumes before Sep 17 bearish engulfing candlesticks were low. Besides, we would strong reasons to hold on to short positions because Sep 18-20 candlestick volumes were low. However, after Sep 21 price explosion at the back of high volumes, sells were nullified and short term bulls were triggered with first targets at Sep 5 highs at $7,300.

In the course of this week, it’s likely that Bitcoin bulls will follow through. In that case conservative buyers would only enter long trades if and only if there is Sep 21-like breach above $7,000–$7,200. Thereafter, we can recommend loading on pull backs in lower time frames with first targets at $8,500 and later $10,000.

DALMAS NGETICH | SEPTEMBER 24, 2018 | 4:30 AM

David