Bitcoin Still below $300

Briefly: no speculative positions.

Rakuten, a Japanese e-commerce company, has begun accepting Bitcoin from its U.S. customers, we read on the Wall Street Journal website:

Japanese e-commerce giant Rakuten Inc. has started accepting bitcoin for purchases in the U.S., adding momentum to the rapid growth of cryptocurrencies as a form of payment.

Customers using the company’s virtual shopping mall in the U.S. site can already buy items using the Internet-based currency, a Rakuten spokesperson in Japan said Tuesday.

Rakuten executives have previously said the company’s Germany and Austria units will allow payment by bitcoin starting in the second quarter of this year.

It is good news for Bitcoin users since yet another company is now accepting the cryptocurrency, albeit only in the U.S. at the moment. As we have stated before, the fact that companies all over the world are beginning to accept Bitcoin shows that there is interest in the system. Of course, retailer adoption is not necessarily the same as customer adoption, since it is the customers that might actually “pull” Bitcoin further into the payment space, but retailer adoption shows that companies are more actively considering Bitcoin a valid payment alternative in which customers might be interested.

Since Bitcoin is slowly gaining attention in various countries with various laws and various business environment, this might as well show that the currency might have value for various kinds of customers. It still seems that we are at least years away from a point at which “Bitcoin accepted here” signs will be seen in store windows as frequently as credit card stickers, but if the trend continues, Bitcoin will gain a presence in this space.

For now, we focus on the charts.

On BitStamp, appreciation was what was visible on Sunday and Monday. Bitcoin came close to $290 but didn’t really move to $300 at any point. Yesterday, we wrote:

(…) the action so far has been supportive of this kind of approach. We haven’t really seen a move down and the volume levels don’t support a strong move down. This is also true at the moment of writing (…). We’ve seen slight appreciation but the trading has been relatively subdued. Right now, we might be witnessing an important day or the next couple of days from the point of view of a trader. This is because the action in the near future might somewhat confirm a new trend or possible negate an uptrend.

If we see a move above $300, this might be an indication of the rally going even further up. For this, a move above $300 would have to be strong. On the other hand, a move back to the level of $250 and below would suggest that Bitcoin is returning to the downtrend.

This has also been true today as Bitcoin hasn’t really moved (this is written around 10:00 a.m. ET). The volume has been relatively weak. The situation as it is, the outlook has just become more bearish. Bitcoin hasn’t moved above $300, it hasn’t even really reached this this level. It may be the case that we’ve already seen a second top within this correction. If not, we might see one within the next couple of days. The mains factor here seems to be the continued weakening in volume levels. It looks like the rally might have run out of steam. We’re not exactly ruling out a move up, but the situation seems to be becoming increasingly tilted toward a bearish short-term outlook.

On the long-term BTC-e chart, we have seen a possible local top. Yesterday we wrote:

The depreciation we’ve seen (…) has somewhat confirmed a possible bearish outlook. In our opinion, it’s still too early to jump in and open hypothetical short positions. We are in fact not far from the point when short hypothetical positions might become potentially profitable but we’re not quite there, in our opinion. If we see more depreciation, we might consider short bets.

Now, we’ve seen some appreciation but not enough to bring Bitcoin above $300. In this light, our yesterday’s comments remain up to date. The drop in volatility seems to be indicating that the rally might have lost its momentum and this might be a hint that Bitcoin could return to its long-term trend which has been down. The situation doesn’t seem clear enough to open hypothetical short positions. This is mainly because $300 is still not far away and a strong move above $300 could change a lot in the short-term outlook at the moment. On the other hand, a move to $250 would indicate more declines to come, perhaps even to the $200 level.

Summing up, we don’t support any speculative positions at the moment.

Trading position (short-term, our opinion): no positions.