BITCOIN PRICE UP ON RATES HIKE FEAR
Yesterday’s final analysis post identified a set-up for another wave of advance. Bitcoin price action, since, has confirmed the potential move – and it is, apparently, now underway.
Bitcoin Price Analysis
Time of analysis: 14h54 UTC
BTC-China 4-Hour Chart
From the analysis pages of xbt.social, earlier today:
The chart, above, is a 4hr BTC-China chart, but the price pattern is consistent across eight of the most popular exchange charts, and the upside targeting involves the 1.618 and 2.618 fib extensions [of the last wave to the upside] in all of them.
A price spike may occur in some charts, and where it does, there is no consistent target. In some charts the spike extends to the 1-day 800MA and in others it falls short, but the 3rd wave up (in all charts) should hit the 1.618 target.
The subsequent 5th wave (the final "hook up") consistently hits the 2.618 fib extension target across the exchange charts.
Fear Fuelled Rally
The June/July rally was, arguably, fueled by the potential of a Greek default, and resolution of that risk event resulted in a sell-off of the entire wave. We might get that outcome here but that is not our immediate concern.
US Dollar Hedge
Although not the sole driver of this rally, concerns about a Fed rates hike seem to have global financial markets worried about dollar weakness and there is a scheduled Federal Reserve rates statement tomorrow Wednesday.
The usual behavior, in the face of looming risk and uncertainty, is for large market players (institutions) to hedge their risk. It seems that, like gold, bitcoin is being utilized as a hedge against potentially weakened US dollar positions.
Going into the Fed statement we may see some bitcoin chart fireworks.
The price action underscores that the divergence meme that is central to our bullish US dollar scenario is not only driven by the timing of the Fed’s lift-off but by what other central banks are doing and going to do. – Marc Chandler
Going into Wednesday and the moment of the announcement, market participants could be expected to pile into bitcoin with a strong advance (potentially spiking) and then a final "hook-up" going into the Fed announcement, or in its aftermath. USD exchange chart targets are around $330 and and BTC/CNY targets near 2250.
Bitstamp orderbook depth and Buy/Sell Volume: