Hi fellow Steemit traders.
There are 18 days left until the 1st of August, and we have to acknowledge the fact that this date represents a major black swan event for Bitcoin.
I´m not going to discuss in this post what will be happening to Bitcoin on the 1st of August, that´s a whole other topic. If you are interested to understand more about what may or may not happen I found this very nice presentation on YouTube explaining it in clear concise detail.
As a trader, what I am interested in and what this post will cover is what users might be doing currently with their Bitcoin and how it might affect Bitcoin´s price.
I see 5 obvious things that Bitcoin users might be doing from now until the 31st of August, let´s take a look...
• Convert Bitcoin into USD
• Store Bitcoin on their paper wallets or hardware wallets.
• Flip into Alts
• Panic (FUD) - Sell
• Buying BTC in belief that a hard fork would essentially give them 2 coins
Let´s look at each of these in more detail and see how they might affect price.
Converting into USD on exchanges in my opinion is the smart move and most likely the "traders weapon of choice". This will give traders the benefit of having cash on hand to scoop up cheap alts or Bitcoin before or after the 1st, essentially it keeps the trader trading. I believe that these users/traders have probably already converted a good portion of their Bitcoin into cash when prices were in the $2,500 USD or higher zones. They may have kept some Bitcoin on tap to keep trading and may will flip the rest into USD if and when they see another price pump closer to the 31st. If we don´t see another price pump they may well just store what they have left on wallets or convert into cash anyway before any dump, depending on their own individual situation.
So if this is the case, we could hazard a guess that a large drop in price of Bitcoin from users selling into USD has already happened.
Although let´s not forget the closer we get to the 31st we could start seeing traders converting their remaining Bitcoin into USD, without many buyers around this would of course drop the prices below what we are experiencing now.
Users who store their Bitcoin on wallets are going to be "bag holders" who want their Bitcoin safe during the potential split/fork. These users are most likely already holding their Bitcoin on wallets as they are probably not actively trading their Bitcoin but rather keeping it as a store of value/investment. These users aren´t really going to effect the price leading up to the 1st.
Flipping into altcoins. This one is an interesting one as any dump in price of Bitcoin will inevitably cause a price cash in the altcoin market, as seen last week. One benefit I can see in converting Bitcoin into altcoins is that users would now have a "safe" cryptocurrency, one that is not in dispute or in danger of splitting. Perhaps last week's blood in the altcoin market may have given these users the opportunity to flip into alts as a kind of safe haven to hide out while Bitcoin sorts herself out. Last week I personally witnessed some of my favourite alts at irresistible prices. The question is will they go down even more as we get closer to the 31st? Again it is possible that the current Bitcoin price has already priced in altcoin flipping, so unless we see another altcoin cash prices won´t be affected.
Listening to FUD and panic selling is an obvious factor we have to consider that will effect price. I believe a lot of users who come under this category have already sold, but the closer we get to the 31st the louder the online news/FUD gets, informing the causal Bitcoin holder, causing panic selling. If support levels break then anyone holding Bitcoin who listens to FUD is going to panic sell. This factor could play a very important part in the price of Bitcoin leading up to the 31st.
Buying up Bitcoin to potentially have 2 Bitcoin after the 1st of August. Honestly, I can´t see many users purely buying up Bitcoin for this potential outcome as a strategy. I´m sure they´re out there, but how many? I think it´s more the traders out there who are keeping Bitcoin in their portfolios who have factored this potentially good or bad scenario as one of the many reasons to keep Bitcoin.
We´ve looked at 5 options that I see happening at the moment in the Bitcoin market. Of course any good trader would be doing a combination of these things.
So what does this tell us, and what price can we peg Bitcoin at from now to the 31st?
Only one out of the five things I´ve discussed sees users actually buying Bitcoin, and i´m not convinced these users are in any great numbers.
So let´s start with the least likely price scenario . It looks very unlikely that we are going to see Bitcoin pump and test the all time high again before the 31st. I just can´t see much evidence that supports this, either in technical analysis or fundamental analysis.
Therefore that leaves us with either consolidation or a downtrend, or a combination of both.
When prices goes into consolidation we need to look at the support and resistance range. Take a look at the chart here to see what I mean:
$2,200 looks like support and $2,700 looks like resistance.
The price in the middle seems to be around the $2,500 price.
If the larger percentage of sell offs has already been factored in we could just see prices bounce off support and resistance until the 1st. Basically just chopping along sideways.
But if key support levels break with any decent momentum the panic selling/sellers will step in and we´ll see some fall in price. How much?
That is THE question. When would buyers step back in? My guess is they are waiting for sub $2,000 levels. From there we could see prices drop to as low as $1,300.
Summary:
We looked at what Bitcoin users & traders could be doing from now to the 31st July.
The conclusion was that the outlook is bearish with more signals towards consolidation up to the 31st of July.
Key support levels are $2,200 and key resistance levels are $2,700.
If we see the resistance level of $2,200 break on most exchanges with momentum then we could see a crash in price to the low $1,000´s.
My personal opinion on where we´re heading?
As I´m writing, (this has taken some time) prices have broken key support levels, but we haven´t seen a complete wash out, it´s been a slow grind down. I personally see us just grinding along with traders in USD buying low, then selling again on a 2%- 3% move up, then rinse and repeat. We are heading down, but it´s a grind and more sideways towards the 31st than a wash out.
That´s not to say I´m not ready with USD to scoop up sub $1,500 BTC, i´ll be ready and it´s a possibility.
I hope this post was useful in some way. Please comment if you have any questions or just want to add your 2 cents, all comments are more than welcome.
It´s always good to analyse the markets at any level, however shallow, or deep you take it.
Safe trading to everyone.