Bitcoin Forum

Microsoft added bitcoin as a payment option for funding Microsoft accounts on the 11th of December. This allows Microsoft users to purchase digital products from the Windows, Windows Mobile and — most notably — Xbox market places. The payments are being processed by BitPay.

This is obviously a very bullish announcement for bitcoin. However, as 2014 has clearly demonstrated, fundamentals and positive news do not necessarily lead to sustainable price rallies. This post will explore the considerations traders should make in-light of the Microsoft announcement.

Will this be a repeat of PayPal?

Bitcoin rallied very sharply from $339.80 to approximately $365 immediately after the Microsoft announcement, squeezing shorters along the way. After rallying, the price has seen some profit-taking but has held above $355 for the most part.

https://i.imgur.com/1MrQQ2t.png

On /r/bitcoinmarket’s daily discussion (http://www.reddit.com/r/BitcoinMarkets/comments/2oxtog/daily_discussion_thursday_december_11_2014/), similarities were identified straightaway with PayPal’s announcement in September: that the payment processor will be partnering BitPay, Coinbase and GoCoin.

https://i.imgur.com/QMDQ2W6.png

As the above chart demonstrates, PayPal simply put the brakes on the downtrend, rather than reversing the trend. The question traders should be asking themselves is: will things be different this time?

Technical analysis round-up

Already, the chartists have been busy modeling how the price rise fits in with the wider bear market. The charts are currently giving mixed evidence, with indicators that the price may rally further or continue to follow the downtrend.

Bullish indicators

Excited_by_typos declared ‘RIP downtrend’ (http://www.reddit.com/r/BitcoinMarkets/comments/2oxpqd/microsoft_adds_bitcoin_as_a_payment_option_for/cmrjgp4) with his chart showing that the vertical candlesticks have faced very little resistance. At least for the next few days, the price should stick above $350, even with some profit-taking.

https://i.imgur.com/yQc7kDv.png

Foxevv (http://www.reddit.com/r/BitcoinMarkets/comments/2oxtog/daily_discussion_thursday_december_11_2014/cmrrprg) took a long-term perspective with his analysis. It appears that the announcement occurred at the same time long-term support was reached. This helped fuel the rally and may be the ‘second-bottom’ investors often like to see, validating the start of early-stage bull markets.

https://i.imgur.com/tPNV8ej.png

https://i.imgur.com/o438h7c.png

Bearish indicators

The more pessimistic traders have been following Elliott Waves closely.

Over at TradingView, User100000's chart (https://www.tradingview.com/v/ZwkT16PG/) shows that the announcement coincided exactly at the start of a new Elliott Wave sequence, whereby the price will rally slightly before testing a new lower low. Furthermore, the rally has not broken through any meaningful upward resistance.

https://i.imgur.com/CXsVqhV.png

Unapologetic_Capitalist (https://www.tradingview.com/v/xtZ40YYs/) has charted the same trend, with a short-term perspective. If his chart is correct, the price rally immediately following the announcement marks the completion of the second wave. This indicates that the price may follow User100000's chart in a shorter time span than initially predicted.

https://i.imgur.com/6MQlfxE.png

Fundamental analysis

Charts alone only tell part of the story. Microsoft accepting bitcoin is a very important milestone for the currency, regardless of whether this is reflected in the price or not. Hence, traders with a long-term horizon — in particular hodlers — have good reasons to be very bullish:

Microsoft adds further credibility, which should encourage Bitcoin skeptics to question their views.

The mainstream media have given favorable coverage of the news, with notable publishers including Tech Crunch, PC World, Market Watch and even the BBC. (http://www.bbc.co.uk/news/technology-30377654)

Bitcoin now has large exposure to a younger-age group (Xbox gamers), who have been more open-minded about the potential of digital currencies (http://cointelegraph.com/news/112589/to-young-people-bitcoin-makes-a-lot-more-sense-jeremy-gardner-college-cryptocurrency-network).

There is now pressure on other corporations to accept bitcoin. Microsoft, Dell and NewEgg show there is little reason not to accept bitcoin. Soon other major businesses may fear being perceived as out-of-touch or slow to embrace change.

However, Microsoft, in theory, may create more selling pressure as they convert their bitcoin sales into USD via BitPay. Having said that, Coinbase have previously denied that merchants have a significant effect on the price (https://www.youtube.com/watch?v=w3OWzZSr8Nc&feature=youtu.be&t=32m2s). Perhaps, the selling-pressure is just a self-fulfilling prophecy?

One last point to consider is that Microsoft accepting bitcoin — only in America — is not a great use-case. Namely, there is little reason for consumers to use bitcoin to spend at Microsoft marketplaces — this may change if Microsoft decides to pass on payment processing cost savings to customers.

Conclusion

Overall, there is ample evidence to justify going either long or short at this stage. Looking at pure support/resistance, bulls should feel confident that the downtrend will be at least slowed down, in a worst-case scenario. However, if one believes Elliott Waves are reliable indicators, then it looks like a new low will be found before the end of the year.

If you are so confident, why did you lower your trading fee's by 20%... What exactly are the trading fees on your site anyway??

If you are confident enough, why did you such a long-winded about Microsoft accept bitcoin to promote yourself?

Confidence is irrelevant we lowered out fees to make trading more profitable on our platform.

Haters gonna hate  ???

Thanks for the summary, personally I found it quite interesting

None of these big names adding bitcoin is going to trigger a rally by itself. That's not the point. Right now it's about exposure. The more people know bitcoin exists the more will hop on when the rally does eventually start the bigger it will get.

Patience. I don't expect anything major until the next halving. Gox needs to be far enough in the past that people forget about it first.

I would agree with this. Even after paypal news, price eventually fell. Bitcoin just needs wide adoption, by many people.
And only then it will increase, and this may happen slowly, but eventually it will.

Glad you enjoyed it.

so did I :)

It will have no immediate affect on the price whatsoever because you need to own Bitcoins in order to spend them and most of the ones owned are either stagnant or being traded.

What does matter is that, an inordinate amount of kids will grow up totally aware of bitcoin and  soon when they need some pocket money to fund their online gaming habit then mummy and daddy will give them some bitcoins (or probably a fraction of) to spend on Candy Crush.

So just give it time and see. The first indicator willo be bitcoin sales over the xmas period.

What else it will do is indirectly inform mumy and daddy and give Bitcoin credibility which could easily lead to faster adoption.. So its all good


Patience Grasshopper unless you are a day trader and ignore the pessimistic bear clowns full of doom and gloom!

I hope not to bother anyone, but is the second time I read someone saying " next halving"

what really mean?

It relates to mining of bitcoin. So everytime you mine, you find a block. Each block gives you 25 BTC. Once it is halved, the reward changes to 12.5 BTC. and this halving happens after years. It just means, that mining reward would be half now.

so when this happens, the mining, which has hardly been worth it, because the energy costs and increased difficulty, will be totally unfeasible. And that should cause a certain imbalance, I think. And for balance, making the mining is feasible, the price of Bitcoin would have to go up? is it? or I traveled?

Exactly! The price will continue to go down & when there is only 12.5BTC in each block a lot of people will be shutting the system down! Bye bye Bitcoin 2016, you had a longgg run for a digital "currency" ... long run as a technology in general ... now the blockchain is already being used as development to move around other real assets. Imagine being able to check a house deed or VIN check a car with the blockchain technology! Amazing future!!!