This is partially a follow-up post to our recent Bitcoin price analysis post on WalletInvestor where we concluded that Bitcoin will start a new run-up if it crosses a muli-month falling wedge. Now we have successfully made a bullish continuation to the recent events and wanted to talk about some possible reasons that made us break upwards.
We are overall positive for several reasons in regards to the future. Firstly all the previous selloffs (3) happening after the initial all-time high of Bitcoin have been getting weaker and less vertical. This means that sellers are getting fewer by day and bulls might soon take over the market.
Next up is the news we have the news of CBOE filing for a Bitcoin ETF. Similar news have been fueling the last bull an approval has the potential to fuel the future one as well.
Lastly we have the CMEGroup futures. The futures exchange announced on Twitter that Bitcoin's average daily volume in Q2 grew by 93% and open interest surpassed 2,4000 contracts, which means a 58% increase. Here is a chart taken from barchart.com that displays the Bitcoin CME Futures Jul '18 market:
As an added bonus we also have several developments lined up for Bitcoin, that we discussed partially in the last post. These include Schnorr and MAST, that will help with scalability and tx fees. We have to note here though, that tx fees on Bitcoin are at a historical low already with the exchanges doing transaction batching and SegWit dominance being on a constant rise.
Charts
Now let's move forward to our charts. Below was our chart from last time where we concluded that we broke out from an inverse H&S and that we may break out from a multi-month falling wedge (pink) as well after finding the third bottom after the all-time-high of Bitcoin.
Earlier we already mentioned that the bears are seemingly getting weaker. This show in the fact that sell-offs after each bounce are getting less steep and the fact that we managed to break a several month downtrend (pink) with solid buy volumes coming in.
We have to watch 3 key resistance areas now, with the top one being the most important. In case we manage to break up over one of the previous bounces we could officially declare the next run, with a multi-month inverse H&S forming in that case.
For now though, we expect a bit of a sideways action around 8000, while we gain some additional fuel to breach the resistance.