Friday round-up

With the looming Death Cross in the bitcoin markets, there was always going to be some kind of reaction when the price approached the 200 daily moving average. If it had pushed through, we would have expected another surge upwards. As it was, BTC touched the 200 MA and promptly plunged around $800. We’ve said before that we don’t rate the Death Cross (daily 50 MA crossing 200 MA) as a meaningful signal, except that ‘conventional’ traders use it and there has been a lot of talk about it in the news, which means it might be self-fulfilling – at least in the short term.

Unless BTC pushes above about $9,200 in the next week, we’re highly likely to see another reaction to that event, but various factors make the picture rather more complicated… a few items of note over the past week have been:

Mark Carney, in his role as Chairman of the international Financial Stability Board, has told the G20 that cryptocurrency does not yet pose a threat to global financial stability.
Donald Trump has banned US citizens from participating in the Venezuela Petrodollar ICO.
US Congress has released its joint report, with an unexpected chapter praising blockchain technology and cryptocurrency.
Twitter founder Jack Dorsey has hailed bitcoin as the future global currency.
This overall positive news might offset some of the negative sentiment around the bitcoin markets. However, there is one over-riding factor that traders must take into account: Tether.

For the first time since news of their subpoena became public, Tether has fired up their printing press – creating an unprecedented 300 million more USDT. This did not coincide with a rise in price, as it often has before. It appears that those USDT have not yet been deployed into the market. Which leaves the question: when will they be used?

It’s all speculation, but if Bitfinex/Tether are expecting a Death Cross to feed into general negative market sentiment, they may be anticipating a massive buying opportunity – perhaps somewhere around the $6,000 zone, or perhaps around the more recent low of $7,300. Either way, be very, very wary of short-term movements downwards. Someone has a lot of firepower ready to buy BTC. Whichever way the market goes, up or down, it will be very easy to get caught on the wrong side of this one.

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