Why Bitcoin is poised to break out to all-time highs
Bitcoin is at a crucial technical point but can it gain the acceptance it needs to survive?
Bitcoin is starting to get some high-profiled acceptance.
First was Sir Richard Branson's Virgin Galactic. Then Overstock began accepting Bitcoin, taking in $126,000 in sales with the virtual currency on the very first day. On Tuesday, the Sacramento Kings – purchased last year by TIBCO founder Vivek RendivĂ© – became the first NBA team to accept Bitcoin payments.
Now, two Las Vegas casinos owned by brothers Derek and Greg Stevens, will be accepting Bitcoin: the D and the Golden Gate. Nonetheless, US government officials are taking an extremely cautious approach to Bitcoin due to it being the currency of choice for some in the criminal underworld. Secretary of the Treasury Jack Lew, in an interview with CNBC on Thursday, said:
"Bitcoin is a phenomenon that we need more time to discuss… From the government's perspective, we have to make sure it does not become an avenue to funding illegal activity or to funding activities that have malign purposes like terrorist activities. You know, it is an anonymous form of transaction, and it offers places for people to hide."
Bitcoin, of course, had a meteoric rise in the past year. At the start of 2013, the currency traded at $13.50. By November 1, it was at $211 and saw $1,240 a little more than a month after that.
In recent weeks, Bitcoin's volatility has softened a bit. Since December 27, Bitcoin has generally traded in a range between $800 and $1,000. On Wednesday, it was trading around $950.
That's a good sign, says Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson.
"This contraction in volatility is really what you want to see as an investor," says Ross. "[It's] maybe not the best thing for a short-term trader that makes his bread and butter from those big intraday swings. But, this really what longer-term – or even intermediate term – investors in Bitcoin want to see."
Bitcoin's recent chart pattern appears to be a bullish pennant, according to Ross.
"I think the next big move, an expansion of volatility out of this pennant, should take us higher," says Ross. "If the measured target is anywhere near accurate, we could see a retest of those old highs around $1,300."
(Watch: Can bitcoin win over mainstream?)
John Stephenson, portfolio manager at First Asset Investment Management, says that Bitcoin's price is driven by more than rational fundamentals, despite recent acceptance by some.
"Every time a new vendor comes on, that's positive for Bitcoin," says Stephenson. "But, the reality is this is just a total mania; there is absolutely nothing behind this."
Besides some of its more negative associations – such as when the FBI shutdown the Silk Road online drug market where Bitcoin was used in transactions – the currency also had a setback when the Chinese government began restricting its use with the country's banks.
However, Bitcoin's success may also not be great news, according to Stephenson. "The very fact that it's been somewhat successful in the last few years is only going to breed other competitors to come in and offer alternative currencies," he says.
Indeed, dozens of virtual currencies have popped up in its wake. Even Business Insider's Executive Editor Joe Weisenthal has launched his own virtual currency, Stalwartbucks.
Stephenson doesn't see much hope in Bitcoin, let alone other virtual currencies, gaining the kind of traction major currencies have had, particularly the US dollar.
"It's never going to be a mainstream currency," says Stephenson. "If you go to Cabo and you need to take a taxi and you give someone a $10 US bill, they know exactly what that is. You give them a Canadian dollar bill with Gene Wilder on it, they don't have a clue what that is. And, ultimately greater acceptance is what's necessary to calm volatility."
[
Note: Gene Wilder was never prime minister of Canada and Sir John A. Macdonald never starred in "Young Frankenstein".]
"Ultimately, I think the direction is down," says Stephenson, "because it's too much of a fringe item."
Source: Yahoo Finance
Download Our App: https://itunes.apple.com/us/app/pinbitcoins/id778624008?ls=1&mt=8
No comments:
Post a Comment