This 8 week arm of the 1.5 year BTC rally is about to subside. First a little history. The Chinese investors (not the government) are in control of BTC value. The Chinese banksters are actively devaluing the Yuan. This is round two of major devaluation moves and it is nearing completion. As it completes the Chinese investors will start taking down their profit converting BTC back into Yuan. The evidence: On the BTCCNY chart the volume in this rally was through the roof. This has tailed off while price continues to climb. This last push is by uniformed stragglers and the informed are about to eat their lunch. On the BTCUSD chart, the volume of this devaluation rally was almost non-existent. The US investors are either completely demoralized or distracted or both. I'm sure the Bitfinex hack pushed many US investors out of the market. Nevertheless, the real indicator to look at is the oscillator Stoch shown in the graph above. It is screaming TOP TOP TOP as what little USD volume there was has tailed off to nothing. The Technicals: I drew a long term resistance level months and months ago based on Fibonacci wedge analysis. This is represented by the blue hash line. The price has reached this resistance. So how do I know the resistance is real? I don't. It's an educated guess. If I am right, this rally will correct back to the red hash rally trend line. This can either be a slow bleed (likely) or a quick retraction (unlikely). My call a couple months ago for $750 by February is still in play. While a penetration into resistance can still happen, the weak volume in the USD market and the dropping volume in the CNY market are strong indicators that a penetration, if it happens, will be short lived. This picture could change in February. From here on out, the total market quantity of BTC will flatten out as minors start to go off-line and transition into full time transfer agent servicing. This will be the foundation for further growth in the value of a BTC. Right now the USD is strong. Trump may succeed with his mandate and change is in the wind but the long term problems of the unfunded liability of the US federal government are YUGER. The federal reserve cannot raise interest rates without destroying the federal government budget. To continue fundingg deficit spending, more dollars must be created. The more dollars that exist, the less they will buy. This is called inflation. Hyperinflation is showing up in a few places, real estate, health care costs, and higher education costs, and it will expand to other areas. In the long term USD strength is a short term delusion.
A brief interim update on the India factor. While it is true that India volume purchases have been on a relatively significant multifold rise since November 7 it is not apparent that it is significantly impacting the USD or CNY value of BTC. There is scant data on volume and TradingView has no chart options for BTCINR. The best that I can determine is that the India market has a long way to go to impact the overall BTC value. India is the second most populous country and 6th largest economy in the world. India is still a sleeping giant. The current rally appears to be all Chinese derived and is mirroring the first Yuan devaluation action. I don't have compelling evidence that this 2 month trend line is a new multiyear vector. It appears the current volatility is late entry panic buying combined with smart money profit taking. At this time, I'm sticking to my hypothesis that we are seeing rally top action and that the Stochastic oscillator is the leading indicator of this action. You gotta love panic.
investigator
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More upward pressure on BTC is coming from India. This might add some new support to the current trend line which has been mostly China centric. This latest surge may be from new Indian demand. This is a heads-up as I am still trying to determine if we are on a new vector. Without India I would expect this latest rally surge to be a last gasp mirroring last mid June. The Rupee is devaluing quickly because of the Indian government's missteps with gold confiscation and move to cashless banking. Adding India to the equation adds considerable complexity to the BTC price dynamic. A further meltdown in India could blow the roof on remaining BTC price resistance. Add to that Greece, Italy, and German EU woes. What a mess! Not to mention the new Black Swans in Turkey and Syria. Bad for them is good for us! Hang on to your hats this roller coaster is about to become violent. Volatility has spiked.
investigator
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Volume on BTCCNY is still large but dropping. That's what is fueling this tale-end of the rally run up. Be careful with new money. You should be pulling profits out of this run. Not putting new money in. There is still no volume in the BTCUSD side of the market. Another factor to watch is the price of gold. It's being pressured big time by a strong dollar. But, Trump has surrounded himself with pro-gold advisors. Look for interest rate hikes that will mark the end of the gold bear cycle a gold bull cycle will certainly pull Chinese money out of BTC.