After hitting highs of $520, Bitcoin (BTC-eUSD) is now headed for the important $500 level. After a week of high volatility, the price seems to be fluctuating with less volatility. After gaining more than 2% on Tuesday, the price is currently down 0.56%.
In the news today and affecting the fundamentals, the residents of the Caribbean island Dominica will be eligible to receive Bitcoin as part of the Bit Drop, scheduled for Spring 2015. The idea of this event is to get Bitcoin into as many hands as possible, increasing the exposure and adoption of Bitcoin. Dominica’s high mobile penetration rates were one key reason this location was chosen. There is a belief that their smart phone users will solve real world problems using Bitcoin, such as reducing costs of remittances and currency exchange issues for travelling to nearby islands.
Generating fears around the safety and security of Bitcoin, a hacker group is distributing malware that is capable of targeting Bitcoin wallets. Most of the affected internet providers are from Ukraine, which suggests that computers in the country were infected or that Ukraine is home to the main distribution servers. This malware is likely to be targeted at disrupting Western crypto-activites in response to the sanctions put on Russia, led by the US.
Some important news from the US is that BitGive, a Bitcoin charity, has received approval from the IRS and has received 80% of the funding it needs to start its operations. Bitcoin has the potential to transform charities, as the transactions costs are low with Bitcoin, so more money can be given directly to those in need.
Looking at the hourly chart below, we see the parabolic stop and reversal indicated the start of a downward trend yesterday at midday. This trend has continued throughout today. The MACD is indicating downward momentum. The faster blue line has not pulled that far away from the slower orange line, suggesting that the market is not oversold yet.
Looking at the hourly chart with the Ichimoku Kinko Hyo, shown below, we can see that the price action has recently moved through the cloud and beneath it. This is a signal that a bearish trend is about to form. The cloud will now act as resistance for the price action. The cloud shows that resistance will be encountered at the $511-$513 for the next 24 hours.
Now looking at the 4 hour chart with the same indicator, we see that the price has recently crossed the base line, which indicates bearish momentum. The cloud at this time frame is acting as support at the low-$500 level. If the low $500 level is broken through, the lower bound of the cloud will act as the next support level, which is around the $490 level.
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