The price of Bitcoin steadily rose today from USD 3,720 to as high as USD 3,920, before pulling back to USD 3,870 as of this writing on the evening of 2 January 2019. There appears to be strong resistance for Bitcoin at the USD 3,900 level, which is exactly the level Bitcoin was at after the 28 December 2018 Chicago Mercantile Exchange (CME) Bitcoin futures contract expiration.
Data indicates that the CME Bitcoin futures have had a strong influence over the Bitcoin market since their launch on 17 December 2017, with each month defined by futures traders going long or short, with most months going short and Bitcoin’s price declining. Based on the strong resistance level at USD 3,900 for Bitcoin, it is possible that the CME futures traders took out short positions at USD 3,900, and are manipulating the market to keep it below that level. If this is true then Bitcoin could see a retesting of the USD 3,100 minimum reached in December 2018.
It is not yet certain that this month is a short. The key level to watch is USD 3,900, since if Bitcoin exceeds that level consistently and rises further, then perhaps January could go long.
The macroeconomic situation in the global economy certainly appears to favor an up month for Bitcoin. It has been theorized that Bitcoin would be a safe haven asset during bearish stock markets since Bitcoin is independent of the market. This effect had not been relevant until recently, as the stock market has been consistently gaining since October 2018, making Bitcoin an unnecessary safe haven.
The current stock market situation seems overwhelmingly bearish. The market has become divorced from the 10-year treasury bond yield, and the current charts suggest stocks need to undergo a 10% crash to reach equilibrium, with this percentage growing every day. This increasing lack of equilibrium is due to overt manipulation of the stock market which is leading to gains despite all the negative economic news. Manipulation is being fueled by banks buying tens of billions of USD worth stocks with pension funds, and the feds are wash trading the volatility index (VIX) to make the VIX drop, which causes automated trading bots to buy stocks. The Dow Jones Industrial Average has already dropped 4,000 points off its highs and is very close to bear market territory, and this manipulation is the only thing holding it above a technical bear market.
Worsening economic conditions in China have led to a decrease in demand for Apple iPhones, and Apple stock plunged so hard after hours that trading has been halted. Futures are down 350 points for the DJIA after hours, which is a similar situation to this morning, before the market ‘miraculously’ went positive during trading hours despite all of the negative indicators.
Back to the point, despite the obvious negative macroeconomic situation in the global economy, Bitcoin is struggling to rise above the USD 3,900 level, possibly because that level is a short position level for CME Bitcoin futures traders. The Bitcoin market cap is only USD 68 billion, much smaller than the USD 10 trillion gold market, which is known to be controlled by Globex futures on COMEX. Therefore, futures traders on CME, which use the Globex platform, can easily manipulate the Bitcoin market.
Perhaps the flavor of the month for Bitcoin will be obvious upwards pressure as people look to buy Bitcoin during worsening stock market conditions, while CME Bitcoin futures traders suppress the price at or below USD 3,900. If this is true, then Bitcoin will be in a relatively narrow trading range during January.
Rest Of The Crypto Market Rallying
Ethereum is the biggest winner of the day, with a 9% increase bringing Ether’s price to USD 154, which is opening up a nearly USD 1 billion market cap lead over Ripple (XRP). The latest Ethereum rally is perhaps being spurred by speculations for the Constantinople hard fork in the middle of January, further amplified by the general positive trend in the crypto markets today.
Litecoin has rallied to USD 33, Monero is up to USD 52, and Dash sits at USD 84. In general almost all of the top 100 cryptocurrencies by market cap are up, which is common on days when Bitcoin goes up. The total crypto market is near USD 133 billion, up from USD 125 billion on 1 January. It seems that all the altcoins generally follow Bitcoin’s lead, whether it goes up or down.
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