In the recent FIA Boca 2019 event, one of the topics discussed was the price discovery of Bitcoin. Representatives of Coinbase, ErisX, Bakkt, CME Group, and Cboe Global Markets, spoke about where the current price discovery occurred and where it would occur in the near future.
Adam White, the COO of Bakkt, began the discussion by stating that price discovery “is very fundamental” with respect to what Bakkt was bringing to the market. He went on to say that the current price discovery primarily occurs in cash markets. He added that the present market was bifurcated between traditional OTC players like Circle and Genesis, and markets like Coinbase, Gemini and Kraken. He said,
“I think those markets are really important. We wouldn’t be sitting out today if they hadn’t come about in the past five to six years. They’ve actually grown this market to one that’s meaningful and shows a lot of promise.”
White further stated that Bakkt “fundamentally believed” that price discovery was going to occur in an end-to-end regulated ecosystem, adding that Bakkt was trying to bring exactly this to the market. He said,
“Bakkt is providing the custodial services that allows ICE futures and ICE clear to trade or facilitate trading in a physically delivered product. And, we believe having that product traded on a regulated exchange for the first time is really going to be important.”
He stated that price discovery was going to switch from the cash market to the futures market, adding that Bakkt would hopefully be a “core product” for the discovery.
Further, John Deters, Head of Strategies and Multi-Asset Solutions at Cboe Global Markets, stated that the price discovery “kind of comes” from different places. He added that the platform’s Bitcoin futures product settled on another platform, Gemini, one of the leading cryptocurrency exchanges in the US. He said,
“That auction event is one of the greatest liquidity events in the global Bitcoin market at least those that are disclosed and its because the people are participating in the futures product and want to get a convergent price. So, where’s the price coming from? The futures traders or the cash traders, it’s kind of hard to say.”
Adam White stated that one of the problems that their customers have is that cash markets were “not regulated exchanges”. He added that these markets had custodial aspects of storing Bitcoin with a BitLicense or a trust, adding that they were absolutely “regulated and rightful”. He said,
“But we actually look at the matching, the center limit of the order book, those pieces aren’t. And, I do think that it is keeping some version of institutional capital on the sidelines saying ‘look we’re going to be ready to enter when we see this end-to-end kind of regulated product’ and I think this is great for the industry to see it happen.”
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Bitcoin price prediction: BTC prices primed for small correction that could evolve into a major correction
Bitcoin has been on a parabolic bullish rally for quite a while, which was followed by sideways movement of the price. However, at press time, the pattern formed indicated an imminent correction.
At press time, Bitcoin was priced just below $8,000, i.e., $7,979 and had a market cap of $141 billion. The dominance of Bitcoin had reduced as the rally ceased and stood at 57%.
Descending Triangle Pattern
As seen in the chart above, Bitcoin’s prices are enclosed in a continuation pattern, i.e., a descending triangle, which is a bearish pattern for Bitcoin. The volume for the same can also be seen decreasing over the course of the pattern, which affirms the above pattern.
When the pattern unfolds, the price will break out of the pattern and head downward; the only thing stopping the price from dipping is important resistance points. The price is likely to hit $7,820 level after the breakout, however, if the former level fails there are subsequent resistance points at $7,674, $7,529, and $7,256, which will be tested in that particular order.
A possible Double Top in the formation?
The above breakout is a short-term movement of price, however, on a longer time frame, the price is stuck in limbo, which explains the sideways movement. The parabolic rally was quick which is why most prominent traders, including Peter Brandt, Tone Vays, and others, are expecting a correction, that is overdue.
In the above chart, the way the price of BTC is moving suggests the possibility of the formation of a double top. However, the pattern is only confirmed after the price breaks the lowest resistance, i.e., $7,529. After which, the price will decline quickly into a correction that is being expected by most of the traders in the crypto space.
There is however a scenario where the price might just take off from here since it’s is undergoing a sideways movement, which can also be treated as an accumulation phase.
Crypto Twitter is quite bullish on Bitcoin and expects it to continue the rally, however, technical analysts and traders are awaiting a correction. According to Tone Vays, the price of Bitcoin will reach $4,500 before proceeding to a bull rally; Peter Brandt is also awaiting a pullback. No matter the outcome, it is better to tread carefully or stick to stacking sats.
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