itBit Bitcoin Market Report: June 2016

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The bitcoin price rose 20% in May and is now up over 30% in 2016. The price had been rangebound most of the year, leaving volatility at extremely low levels. Big upside volume helped boost the price above key resistance levels in the $470-$475 range and then over the November high of $500. The price hit new annual highs on almost a daily basis over the final week of May, peaking around $550 on most major exchanges.

BITCOIN Price Snapshot

Past Month (May 2016)  +20%
Year-To-Date  +34%


The price move wasn't media-driven as May was light on news with the exception of the code being released for Segregated Witness. This is good news fundamentally as it is sets the stage for block size to be increased and end the ongoing debate which has brought uncertainty to the market.

 

May Bitcoin Market Moving Events 

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May BITcoin Market Moving Events summary

5/2 China unveils ChinaLedger, a blockchain consortium for financial services  -1.64% 
5/6 Evidence mounts that Craig Wright is not Satoshi Nakamoto  +3.0% 
5/19 Sydney Stock Exchange announces it will be developing Blockchain Trading System  -4.0% 
5/25 Japan enacts regulation for domestic digital currency exchanges  +1.1% 
5/26 CFTC Grants full registration to bitcoin swaps trading platform, Terra Exchange  +1.1% 
5/28 The DAO starts trading after raising ~$180 million of Ether  +12.1
5/30 EY to sell $12 million of Bitcoin in auction June 20, 2016   +0.7% 

 

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June Price Outlook

The price setup in the bitcoin market remains bullish but traders should prepare for a potential pullback in the first half of June. The RSI and MACD indicators have exceeded overbought levels and the price is stretched from its moving averages. Long-term support can be found at $525 and $500.

Given the positive momentum, the price of bitcoin can certainly continue to go higher this month despite the overbought market conditions. The reaction at the major resistance level of $600 will determine the fate of the current bull run. Breaking through $600 could pave the way for an even bigger upside price move.

 

Key Macro Events to Watch in June

Capital outflows from china

Most of the volume that has fueled the recent price surge came out of China. Capital outflows from the mainland hit new highs in May and, as we have mentioned countless times in prior reports, the Chinese are increasingly using bitcoin as a means of getting money out of the mainland.

These outflows were driven in large part by yuan devaluation reaching the highest levels since August 2015 and China’s skyrocketing debt levels. Additionally, the Chinese stock markets continue to struggle and are being outpaced by bitcoin. As the old saying goes: money goes to where money can be made. 

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Bitcoin Halving

Traders should also keep an eye on the impending bitcoin halving, set to occur on July 10th. The bitcoin block mining reward will go from 25 to 12.5 bitcoins and this change adds a level of uncertainty to the market. We will have more analysis on this in our July report. 


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