News broke from the CFTC last week regarding the future legality of certain trading venues that offer swap facilities and, more importantly, that bitcoin is now classified as a commodity. Although there is now greater clarity around the categorization of bitcoin and which federal regulatory body oversees the digital currency, the CFTC’s action created temporary uncertainty for bitcoin traders as they look to understand the ramifications. This uncertainty was reflected in the price of bitcoin as the market traded sideways for much of last week.
Bitcoin Price Recap
The bitcoin market traded tightly last week, with the intraday price swings maxing out at 2.5% in either direction. Prices bounced between $227 and $235 with resistance holding true as the market tested $235 throughout the day last Thursday.
Exchange volumes also continued to trend lower. Last week's closing volume is down roughly 35% over the past six months and it appears that overall bitcoin exchange trading volume has faded over time with the market's volatility.
The market has also become noticeably less headline sensitive over the past few months with a majority of positive and negative news creating less opportunistic movements for traders. This is exemplified by the limited reaction of the bitcoin market to last week’s aforementioned CFTC announcement and the Federal Reserve’s decision to leave the US interest rate unchanged.
Bitcoin by the Numbers
Bitcoin Trading Week Ahead
The bitcoin price stands at a crossroad. Some would argue that it's been in this position for the better part of the year as prices have been generally stagnant, waiting for a breakout in either direction.
Traders can look to the same technical parameters this week with support at $227 and resistance at $235. Should support break, the next level would be $220. This is a support level we last saw at the end of August.
Another key metric to watch (as always) will be global volumes across the major exchanges. As the market heads into Q4, we should begin to anticipate traders looking to either lock in losses or gains for 2015.
Best Bits from Last Week
- Forbes: Bitcoin Blockchain Technology In Financial Services: How The Disruption Will Play Out
- Fast Company: Why IBM Thinks Bitcoin Technology Will Change Banking, Household Appliances
- Coindesk: JPMorgan CEO Cautious on Blockchain Tech Despite New Partnership
- Barrons: It’s Official! Bitcoin Is a Commodity
Bobby Cho is the Director of Trading at itBit and heads our Global OTC Agency Trading Desk. Previously, Bobby was Vice President of Trading at SecondMarket where he helped create the first broker-dealer based institutional bitcoin trading desk. He has extensive experience in both bitcoin and securities trading with clientele ranging from Fortune 500 companies, hedge funds, asset managers and other financial institutions.
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*All data and references are current as of 9:00AM EST on 9/21/2015.