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Friday Inferno analysis

There’s good news and bad news, again…

On Tuesday we posted our analysis that bitcoin was painting an inverse head and shoulders, a classic reversal pattern. That pattern continues, with the price dropping dramatically from the $6,800 resistance level if failed to breach on Monday, down to $6,072 (Bitstamp) in the early hours of Friday – before staging a strong recovery.

A $600 fall isn’t great, but there’s a silver lining. Right now, bumping along around $6,200 is painting the second shoulder of the inverse h&s. The pattern began a month ago after bitcoin’s drop from the high $7,000s at the beginning of June. The first shoulder took around 10 days to complete – though if you take a look at the 4h chart, you’ll see it’s not 100% clear where each move ends. The neckline gently slopes downward from $6,800.

So that’s the pattern to watch over the coming week. As we said on Tuesday, $6,800 is the price bitcoin needs to stay above to validate the inverse h&s. If it doesn’t then, well, look out below.

In the news, we have the Trade Wars heating up between the US and China, which could prove extremely counter-productive in terms of global economic growth. Additionally President Trump, currently on a visit to the UK, has trashed Prime Minister Theresa May’s proposed plan for Brexit, saying that it will ‘probably kill’ a US trade deal. None of this is positive for the UK, US or the rest of the world – but it signposts incoming demand for crypto. Also good news for crypto is the proposed new bitcoin ETF, which looks like it stands some chance of approval.

The Bancor hack that we covered earlier this week has led to $12 million in ETH being dumped on the market – not a huge amount in the grand scheme of things, but nevertheless significant. Lastly, John McAfee is getting legal on HitBTC, promising $20 million to a suit against them if they don’t answer his emails. His complaint appears to arise from his dissatisfaction with the withdrawal fees charged on the Docademic token.

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Friday Inferno round-up

This week… Bitcoin headed back to levels not seen since February, touching a $6,120 low. The price has since risen to around $6,600.

There are various reasons for the crash and recovery, though the idea of ‘news’ driving the markets always has to be taken with a pinch of salt. (Bad news has a habit of being ignored in a bull market and good news in a downtrend.)

Firstly, there was the study that shows evidence that the price of BTC was manipulated by Tether creation in the run-up of 2017. This will come as no surprise to anyone in the crypto world, but was heavily featured in the mainstream news. See Inferno’s post, https://telegra.ph/The-University-of-Texass-Tether-study-is-a-lot-like-watching-The-Force-Awakens-06-14.

The immediate catalyst for the move upwards appears to have been the news that the SEC has finally decided bitcoin and Ether are not securities: https://www.wired.com/story/sec-ether-bitcoin-not-securities/. Most ICOs do qualify as securities, however. This situation is, again, much as the majority of the crypto world expected.

In ‘offbeat’ news, Star Trek’s William Shatner has joined forces with the Solar Alliance to promote sun-powered bitcoin mining: https://news.bitcoin.com/william-shatner-joins-bitcoin-mining-project-admits-he-doesnt-quite-get-it/.

Steve Bannon, Breitbart co-founder and former chief strategist to Donald J. Trump, has also gone on the record as being in favour of bitcoin: https://www.nytimes.com/2018/06/14/technology/steve-bannon-bitcoin.html. Bannon owns a significant amount of bitcoin, and is considering creating his own cryptocurrency, liking the disruption the concept poses to the banking system.

Finally, someone has been trolling Craig ‘Satoshi’ Wright: https://twitter.com/kanzure/status/1007441372209655808?s=21. The Bitcoin Alert Key is a key used to notify all clients about critical network problems, though it was retired some time ago and is no longer used. In his tweet, Brian Bishop is making the point that although numerous people share the Alert key, it is not publicly known. If Craig Wright was Satoshi, or closely involved at the early stages of bitcoin, he would have it. He does not.

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Friday crypto round-up

What’s been going on in the wonderful world of crypto this week? Well, starting with the markets…

The total market cap of crypto has started rising again after bitcoin bottomed out around $7,000. Last time that happened, market cap almost doubled from less than $250 billion on 1 April to $470 billion five weeks later. It’s too early to know whether this is a sustainable rise, but it looks like money is starting to come into the overall cryptosphere again: https://coinmarketcap.com/charts/.

One of the factors that will help that process is better on-ramps and off-ramps for fiat, and Bittrex has just announced it’s managed to get a USD banking partner: https://www.bloomberg.com/news/articles/2018-05-31/bittrex-gets-bank-agreement-to-help-you-buy-bitcoin-with-dollarsCustomers will now be able to deposit dollars and trade them against bitcoin, Tether and TrueUSD, another stablecoin like USDT (though not as controversial). Meanwhile on the other side of the world, no fewer than six Japanese public companies plan to launch crypto exchanges.

We’ve been seeing the ‘Bart Simpson’ patterns in the markets again. These are most obvious on the 1-hour chart and take the form of a fast spike up, a jagged top and then an equally swift crash. They have been a feature of the bear market for the last few months, and may signal manipulation by large players: https://themerkle.com/what-is-the-bart-pattern/The most recent Barts have lacked the downstroke, signalling that perhaps something else is going on now. The other ‘pattern’ to watch is the 6 pattern: the theory that a medium-term reversal happens on the 6th of every month: https://telegra.ph/Sixth-Sense-05-30

There’s been some interest in bitcoin as an early warning system for problems in the wider financial markets: apparently, there’s a strong correlation between bitcoin 30 days ago and the VIX or ‘Fear Index’, a measure of volatility: https://www.cnbc.com/2018/05/29/bitcoin-is-the-markets-new-fear-gauge-investor-says.html

And lastly, the SEC has gone after Michael Stollaire, a self-professed ‘blockchain evangelist’ who conducted an ICO under the influence of thinking it was still 2015. Stollaire fraudulently claimed he had dozens of major partners including Disney and Boeing for his Titanium token sale (see

https://www.sec.gov/news/press-release/2018-94).

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