Bitcoin price diverged between exchanges today as a surprise yuan devaluation shifted buying pressure to the BTC/CNY exchange charts. The yuan is responsible for the greater bulk of bitcoin trade and showed its influence in the chart today.
Bitcoin Price Analysis
BTC-China vs Bitstamp 1-Hour Charts
From the analysis pages of xbt.social, earlier today:
The surprise devaluation of the yuan, today, had price diverge between USD and CNY exchanges as yuan-holders fled to bitcoin as a store of value.
The Asian trading session seemed disjointed at first as the USD exchange prices held steady while the CNY prices kept pushing higher with strong buying in evidence.
Luckily for us, OTC trader (and xbt.social member) Dong Zhao informed of the reason for the dynamic: the PBoC had lowered interest rates and prompted a one-time yuan devaluation that caused this sizable shift in the bitcoin chart, as well as larger shifts in global markets.
There has been a tendency, recently, for the US session to sell down the gains bought up during the Asian session. If this dynamic plays out it could topple price into decline today. However, be cautious – we do not know how many US investors (including large players) secretly hold large amounts of yuan! Trade may yet push to another high.
With the yuan being devalued it makes sense for a yuan holder to convert to bitcoin and to then, later, cash back into yuan (if bitcoin advances) or to change to US dollar (if bitcoin goes down).
Despite the corrective advance today, and additional highs later, our outlook remains that the bitcoin chart should continue decline to near $250 and 1550 CNY before a larger upside reaction.
The most important rule of trading is to play good defense, not great offense. Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum possible draw down. – Paul Tudor Jones
The yuan factor may continue to apply upward pressure in the bitcoin chart, but in the final technical analysis decline remains incomplete and will remain so until price fathoms the $250s and 1500s CNY levels. For now remain cautious and keep your trading eye on the 15-minute 200MA for a sell signal.
Bitfinex orderbook depth and Buy/Sell Volume during the Asia-Pacific session:
What do readers think? Please comment below.
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The writer trades Bitcoin. Trade and Investment is risky. CCN.LA accepts no liability for losses incurred as a result of anything written in this Bitcoin price analysis report.