Picking up from last week...Looking at today's prices, we can see that after another week (week 2) of data we have been following the green trend line proposed in the OP closely, with the tendency to sideways movement playing out as predicted. The second yellow cross marks where we are today.
When I resumed our progress last week I made the point of saying that we might break back up into a rally and then fall back again to around the green trend, which we did.
Last week's post also made the following point:
“As we come towards the end of the month, the curve will begin becoming steeper again and this time we will break $1,000 definitively. This will happen just before or at the time of the New York Department of Financial Services Bitcoin hearing on 28 and 29 January.”Hovering under $1,000When I made the first post in this series on 3 January, I was asked about the shape of the proposed trend.
The current sideways movement reflects two things:
1. The psychological wall of $1,000.
2. The wait for the Chinese New Year.
$1,000Although we are now seeing the first indisputable evidence of Bitcoin's move into the mainstream and of the beginning of mass-adoption, the barrier of $1,000 holds a certain power.
The Chinese New Year 31 January doomsday scenarioFor several weeks now the forum has been awash with claims that come 31 January, we will see a mega-crash due to various factors including the Chinese dumping their Bitcoins and withdrawing their money from exchanges en masse.
A lot of people have been building up reserves of fiat to cash in on the panic sell they imagine will happen.
But think about it. With less than two weeks until 31 January, don't you think that any sensible Chinese person wishing to throw in the towel and cash in would have already at least sold their Bitcoins? I mean, how long does it take to withdraw money from the exchanges over there? If it is anything like over “here” then usually 5-10 working days in the best cases. And with the apparent rush to withdraw, wouldn't a few prudent Chinese whales have dumped already to get to the front of the queue?
The Chinese scenario is just a smokescreen. Chinese Bitcoiners are enthusiastic. They are also not doing anything illegal. The market for Bitcoin is going to continue in China and despite the FUD you read here, of all the official statements coming from the government in China none have claimed otherwise.
As it becomes clear over the following days that there is going to be no such mega-crash, those waiting for cheap coins will start to get nervous.
End of JanuaryThe pressure from China is keeping the price suppressed, and yet the behaviour of the market post China-bubble is incredible, with Bitcoins commanding a supported high premium. The change in market sentiment is palpable; we all know that over the days and weeks and months to come Bitcoin will keep exploding into the mainstream. Within the next few days we are going to see more large businesses adopt Bitcoin, decisions from the world's governments, and conferences taking place including the New York hearing. And importantly, as the Chinese smoke clears the market will lift again.
HoldersOver the past weeks we have not seen any panic selling. Whatever bad news has come out has only resulted in small-scale, measured sell-offs. Hodlers are controlling the market now. They know that waiting for the weeks to pass as 2014 unfolds is going to be very well worth it. It makes sense to sit back and relax now – no need for the stress of trying to trade unreliable intra-day trends.
In short, time has proven that investing in Bitcoin for the long-term rather than trying to ride the waves up and down is by far the most profitable strategy. But today, at this very moment at the outset of 2014, a potential investor has not only the security of past data on which to base their decision to buy and hold, but also diverse evidence of vast growth to come in 2014, adding a hugely significant extra layer of security.
This has caused the biggest change in market sentiment since the beginning of Bitcoin. This is what is being reflected today in the charts, and what I showed with my trend line two weeks ago.
EDIT: Just to point out the dangers of listening to TA experts on here, so far my chart has soundly beaten the predictions of at least 3 independent experts using all kinds of intricate methods.
