Did Barclays Start The Bitcoin Bull Run?
Bitcoin Takes A Breather From The Bear
"The bulls might have taken round 1 of this latest battle but I am not certain from market internals they are going to take the match here near term."
BTCVIX, Professional Bitcoin Trader
After a month of severe bearishness, bitcoin has finally found what can be perceived as support at around $200 BTC/USD. With the recent bounce to above $220, it is fair to say the largest digital currency by market cap has consolidated and for the time being has turned bullish from sideways.
While the $200 price level stands as a psychologically strong buy zone for long term investors, one must also consider that the quick consolidation and presumably short bull run might have been due to external fundamentals as well.
Barclays Recent Bitcoin Moves Could Have Something To Do With It
With Barclays recent announcement that they are planning to accept bitcoin for charitable donations, many investors believe this could be the first step towards mass adoption of bitcoin technology by large financial institutions.
Barclays has said that they would start off slow by accepting charity payments in bitcoin with plans of doing more with the technology as their confidence grows. It is important to note that Barclays is the largest bank, with a market cap of £43 billion pounds, to announce they would accept bitcoin.
For those those who have been watching closely, this seems to be part of a natural evolution in the relationship Barclays has had with bitcoin. Much of this journey can be attributed to Derek White, Chief Design & Digital Officer at Barclays. As someone who believes banks need to embrace blockchain technology or be disrupted, he once said:
"We fundamentally believe that the world is shifting from closed to open — closed architecture to open architecture, everything moving to the cloud; closed networks to open networks; closed systems to open systems."
Even though Barclays is not the only financial institution experimenting with the blockchain, evidenced by the announcement that Visa recently started experimenting with the technology as well, it is ahead of most financial institutions in their research and development of blockchain technology.
Bitcoin Is Showing Signs Of A Breakout
The announcement came when the spot BTC/USD price was around $204, this immediately prompted a quick run-up to the $220 levels. After considerable consolidation, the market is now considered to be bullish in the short term timeframe.
Technically the market has to offer some positive signs for bitcoin.
After the $220 price level held for three consecutive days, we can see that the MACD has crossed the signal line and the market has been set into a bullish phase after considerable consolidation.
Currently the Bollinger bands are expanding and are showing signs of breakout. Market is even trading above the long term resistance of 34 SMA and 38 percent Fibonacci retracement level of the move from $317 BTC/USD.
With a close above 34 SMA today, there is a strong possibility for the market to touch the zone of heavy resistance around the $250 price level, with 100 SMA, 200 SMA and 50 percent Fibonacci retracement level guarding that region.
Whether this would be converted into a trending bullish market or would remain a short covering rally can only be deduced by observing the MACD line. The MACD is approaching the zero line from the downside, with a clean crossover and fundamentals supporting the break of the resistance zone, signaling the launch of a trending market that could be possible.
About The Analyst
Deepak Bharadwaz is a Market Data Analyst for IHB's Bitcoin Trading Intelligence platform. Before trading bitcoin he was heavily involved in Intraday trading of Coffee and Cocoa Futures Contracts on the Inter-Continental Exchange (ICE) and London International Financial Futures and Options Exchange (LIFFE).
He trades the markets based on price action, supply-demand chain, fundamentals and macro-economic data inflow. His comprehensive understanding of various technical indicators guide him as he executes strategies based on technical analysis.
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