We’re right at the middle of the week with the price of Bitcoin looking better than expected, thanks to increased interest that started forming yesterday afternoon. The volatility that has been frequently noted in the past days is going away while the price is currently looking to form support at the $1,030 mark. However, current market trends suggest that this would not be an easy job.
In other interesting news from the Bitcoin world, the Vernon Hills village in Illinois, USA, is about to enter the Bitcoin world thanks to a public auction of BTC seized by the local police authorities. The Vernon Hills police force was able to get their hands on $10,000 worth of Bitcoins thanks to their joint police actions with the federal authorities.
According to Nikki Larson, the Finance Director of the local police force, the village can’t find any use for Bitcoins, so after an approval from the trustees, they will be selling them through Coinbase’s exchange platform, of which they say is “police-friendly”. The funds will then be redirected to the police’s asset forfeiture fund, while the VHPD spokesperson says they expect a second auction, later this year, after a second seizure.
Sellers Take over Market
Just when things started picking up for Bitcoin, the price had a volatile drop that took it down by nearly $40, all in a matter of minutes. While all morning it was moving closely near the $1,060 mark, in the course of one hour it went from its highest peak of $1,061.61 to $1,019.87.
The market is seeing increased interest, which at this time is mostly focused on selling. The trading volume has spiked in the last few hours to the current $170,445,000, while the market cap is at $16.9 billion.
Our technical analysis shows that the market is fully pro-sell, with 10 out of 12 moving averages and 7 out of 12 technical oscillators sending a selling signal. While the SMA 100 is still safely over the SMA 200 on a short term and long-term time frame, the Stochastic is signaling that Bitcoins are overbought, thus hinting at a break from buyer pressure.
At this time, the market seems swarmed by sellers looking to profit on the major uptick. While the price is struggling to find support at $1,030, whether it will hold will be up to the duration of the bear wave. If the wave continues, we might see the drop continue.
Bitcoin up thanks to a Drop in China’s FX Reserves
Once again, reports are coming in from the Bitcoin community that we have China to thank about the recent price increase. Namely, right about the time news spread that China’s foreign exchange reserves suddenly dropped below the psychologically vital $3 trillion level for the first time in six years, despite all efforts from Chinese authorities to subdue cash outflow, the price of Bitcoin started climbing upwards.
The foreign exchange reserve dropped by $12.3 billion to $2.998 trillion this January, a month after they saw a drop of $41 billion in December, prompting concerns over the speed with which the country is spending its FX reserve. And even though the decline has been significantly slowed down, the breaking of the psychological level was enough to once more put the spotlight on the weakening Yuan.
Coinciding with the event, interest in Chinese Bitcoin exchanges started to pick up, probably for the first time since the end of January, when the government successfully worked out a trading fee with BTC exchanges, in hopes of subduing high-volume trading and market manipulations.