Bitcoin Price Analysis – May 26, 2017

The new asset has reached extensive new levels, which grasp the eyes of any person even if he is not an investor. Analysts may differ in the reasons that have led to that, and may differ also in forecasting the future of the Bitcoin price. In order to forecast the future of the Bitcoin, we have to review the last events during the previous period.

Fundamental reasons leading to the rise of that asset, could be the dovish statement of the FOMC, or the Trump-FBI dilemma. Probably “Ransomware” virus has pushed the Bitcoin higher after the hackers asked their ransom to be paid in Bitcoins; however, the Momentum is much stronger and it started earlier.

Technical Overview

As I mentioned before in my article “Rising cryptocurrencies” that Bitcoin is a mixed nature asset, thus it is important notice for analyzing the Bitcoin. Comparing the Bitcoin to the VIX and S&P500 we can find out that the three are correlated.

The previous chart is showing how much the VIX is a very good measure for the Bitcoin as much as the S&P500. The two orange arrows are indicating the general trends of the VIX and the BTC and it is obvious that they have a negative correlation.

Some important notices in this chart and the next one.  Firstly, sometimes the correlation is positive. In the blue arrow upside, we can see the US elections effect in late through the Trump inauguration in early 2017. Black arrows shown in the downside graph was within the BREXIT referendum in 2016, which also had a rare positive correlation.

Second important note is that when VIX started to change direction, we can anticipate the correction in the S&P500. However that fact, BITCOIN had been preceding the VIX itself in the recent times. That is noticed in the first chart from April as you can see the red arrows and the grey circles.

As a conclusion:

1. The new mixed nature asset [Bitcoin] is analyzed regarding the general stocks.
2. Bitcoin would be in the future a very good indicator for the stocks general trend.
3. VIX is very negative so Bitcoin will keep bulling until the next UK elections on June 8^th, but be cautious with the elections outcome that will decide whether if it will continue rallying or Bitcoin price will correct.