bitcoinvancouver

The GoTo Site for all things Bitcoin in Beautiful Vancouver British Columbia Canada

Bitcoin Trading Notes: Market Momentum and Spread Trading

Bitcoin Trading Notes: Market Momentum and Spread Trading

Bitcoin’s latest price climb has garnered quite a bit of attention, breaking all time highs and leading many to declarations of a bubble. While the price and resultant media storm have been enjoyable to watch (particularly for bitcoin holders), the markets have also offered a number of more nuanced dynamics worth noting.

The BTC / USD rate remains more than twice what it was just one month ago after a series of dramatic climbs beginning in mid-October. This weekend in particular saw quite a bit of notable activity as BTC / USD fell 26% from $360 to $260 in just eight hours before recovering to $335 most recently. Though there are significant underlying fundamental differences behind the bitcoin economy now relative to similarly dramatic gains in the past, a number of market signals are worth noting.

Market Momentum

Though bitcoin has climbed more than 2,200% in 2013 alone, a series of significant drops have occurred along the way. Timing the exact peak of a price climb can be difficult, but occasionally there are indications that the bitcoin market is getting close to such a point. Just over two weeks ago we pointed out what historically unsustainable momentum looks like by looking at 10-day price velocity. This weekend saw a similar scenario, with the metric reaching >0.5 on Saturday, a level only seen in the final days of the June 2011 and April 2013 bubbles and followed by a significant correction thereafter. Incidentally, the latest 26% drop in BTC/USD occurred the day after that level was reached.

price velocity

 
Advertisements

Questions, Comments, complaints or observations? Your input is important to us.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Information

This entry was posted on November 11, 2013 by and tagged .

Follow me on Twitter

bitcoinvancouver2013@gmail.com

bitcoinvancouver2013@gmail.com

Blog Stats

  • 9,831 hits

Follow me on Twitter

%d bloggers like this: