Bitcoin markets have gone back and forth during the trading session, showing signs of strength again. This is what the crypto currency markets needed to see, and the fact that we have formed 2 positive days in a row is somewhat encouraging. However, on short-term charts it looks as if the $8000 region is going to be difficult, and I believe that there is a significant amount of resistance at the $10,000 level. In fact, later in the day we started to see volume drop-off, but quite frankly the market could fall straight down, I mean eventually somewhere you run out of people to sell to. I would point out that volume for the session on Tuesday was half of what it was on Monday, so I think what we are seeing is a bit of a “dead cat bounce.” If we got a daily close above $10,000, then I think fresh money would come back into the market.
The Bitcoin market also rallied against the Japanese yen, showing signs of life. This is probably the most important chart to follow, as most of the Bitcoin trading is done in Japan. The ¥1.1 million level needs to be broken on a daily close for me to be interested in buying at this point. I suspect that we may try to grind a little higher, but the sellers will almost certainly come back in. The psychological aspect of the market testing the ¥1 million level will have an effect obviously, but with the massive amount of negativity that we have seen over the last several weeks, I think a lot of psychological damage has been done. Unfortunately, most of the Japanese trading public was also levered, meaning that the losses were much worse than they appear.