Lifting the Offer: Bitcoin trading analysis for the week of June 22nd, 2015

Lifting-the-Offer---Week-of-06.22.2015

This was a strong week for bitcoin traders. The price rose 5% driven primarily by the return of macro traders to the Chinese bitcoin market from the Shanghai Stock Exchange (SSE). The week ahead will test the new price level and attempt to buck the trend of late-month sell-offs that have been commonplace over the past four months.


Tradeblock-06.22.2015Source: tradeblock.com

Bitcoin By the Numbers

Bitcoin-Price-and-Market-Cap-06.22.2015

Best Bits from Last Week


Bitcoin Price Recap

The market extended its June bull run climbing nearly 5% over the last week. Upon closer examination, intra-week prices jumped approximately 10% over the first three days of the week. This move was fueled primarily by macro traders coming back into the Chinese bitcoin market.

From mid-May through last week, the market witnessed a shift in liquidity from bitcoin to the Shanghai Composite Index (SSE) with volume drying up across the major Chinese bitcoin exchanges. We saw the reversal of this trend last week with Asian macro traders transferring liquidity back into bitcoin causing a 20% drop in average weekly volume traded in the SSE.  This is the most significant decline in weekly volume traded in nearly two months.

Shanghai-Composite-Index-Volume---Weekly-Volume

Shanghai-Composite-Index-Volume---Daily-Volume

Source: https://www.quandl.com/data/YAHOO/INDEX_SSEC-Shanghai-Composite-Index-China*

 

Speculation around Greece’s exit from the EU may also have helped drive the bitcoin price last week. However, the ongoing speculation could have already been priced in as the bitcoin price is up almost 7% in June.

Looking at the bitcoin market from a broader lens, the fact that non-bitcoin related news legitimately impacted the price is noteworthy. Historically, the vast majority of price moves have been motivated by Bitcoin-specific news and events. This could be an indicator that the bitcoin market is slowly becoming more closely correlated with other markets and asset classes.

 

Bitcoin Trading Week Ahead

The biggest question heading into the week will be around the sustainability of the current price level. Resistance was met around $250 early last week as the market digested the run up in price. Even with last week’s 5% rise in price and an increase in volatility, the market may look to find a stable support level. As we noted in last week’s Lifting the Offer, the second half of the month has been notorious for increased sell activity over the last four months. Should the market extend its gains this week, this would be the best run since March and will continue to build trader confidence.  

 

This Week in Bitcoin’s (Limited) History

2013: WSJ: States Put Heat on Bitcoin

2014: BBERG: Bitcoin to Get More Attention From U.S. Consumer Bureau

 

Released every Monday, Lifting the Offer provides market and price analysis to prepare bitcoin traders for the week ahead. Check out the full LTO archive

 

Bobby Cho is the Director of the Institutional Client Group at itBit. Previously, Bobby was Vice President of Trading at SecondMarket specializing in trading bitcoin and illiquid asset-backed securities. Comments? Feedback? Shoot Bobby an email.

 

*All data in this post is current as of 9:00AM EST on 6/22/2015 

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