Bitcoin Price Set to Range in Safe Channel

Bitcoin (BTC) is looking strong today, after breaking out to the upside from a period of consolidation above the critical $5,000 area. The leading crypto is now retesting the topside of its April channel, first laid between April 3 and 6.

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There is a good likelihood of rejection here, owing to tepid strength and volume on the attempt (at time of writing it already looks to be rolling over). A rejection here is not bad, however, as Bitcoin’s ranging in this channel could give the rest of the market some runway: a stable Bitcoin is historically the only time when altcoins do really well, and this still seems to be the case.

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While short term volatility for Bitcoin looks to be cooling off, the leading crypto still looks great on longer term timeframes.

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On the weekly chart above, the trend is a clear “up” as all of the April gains were handily defended - even with last week’s Tether/Bitfinex news, which does not appear to have damanged the market much. And the weekly histogram has, for the first time in over a year, shown strength above the median line.

What’s more, the latest weekly candle is so far looking fabulous. If this candle can last a few more days at this level, it will form a bullish engulfing candle versus the previous week’s red candle and look extremely promising.

The daily chart looks less bullish, though, suggesting that such a good weekly candle might evade us. Although we have achieved a “golden cross,” we can clearly see falling strength on the daily RSI, with lower highs and lows. Falling volume is visible, suggesting consolidation.

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All Bitcoin really needs to do is range above $5,000 - only that much strength is necessary. If it can do this, gather strength for a new movement, and let the rest of the market run, this would be completely ideal.

The negative alternative is falling back below $5K. This retrace would fall into a sort of no-man’s-land between $5,000 and $4,200 where this is very little recent price history - and thus little predictability for support zones. But we’ll worry about that if it happens.

(The views and opinions expressed here do not reflect that of and do not constitute financial advice. Always do your own research.)

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange (CME) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak,  a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported, there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

This has become a pretty accepted practice within the market. Kruger has even gone to the lengths of compiling statistics each time this phenomenon transpired:

On these occasions, bitcoin cited an average 4.6% price discrepancy following the close of the CME.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.

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