Bitcoin Bounces on Signalling for Scaling

We’ve had an interesting week for bitcoin as prices first crashed below the $2,000 handle only to rally strongly from the lows on renewed hope for scaling. Litecoin followed a similar pattern with a fall to $35.30 followed by a 21% rally to $42.89 dollars per coin.

Bitcoin Bounces on BIP91 Signalling

Bitcoin prices bounced from the $1,812 lows to a hit a high of $2,232 today, a move of over 23 percent. The sharp reversal during the past three days can be attributed to bitcoin miners signalling for BIP91 ahead of schedule. The initial plan called for the Segwit2x software to be deployed and for signalling to begin on July 21st. More on this HERE.

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The early start is adding to the positive sentiment because it means that Segwit can be locked in before signalling for the controversial UASF (User Activated Soft Fork) starts on August 1st. This would avoid a network split and remove the fork fears for at least three months until it’s time to deploy the 2MB block increase.

While the fundamentals are positive, technically we’re still in a downtrend on the daily charts. The bulls will need to break above the $2,530 level to end it. A move above $2,550 is needed for a new rally. On the long-term charts (weekly and monthly) BTC is looking bullish.

Litecoin Rallies 21 Percent From Lows

Litecoin followed big brother bitcoin, first lower then higher. On July 16th a low of $35.30 was hit, followed by a 21% rally to $42.89 the next day. Today we are trading a bit below the highs at $41.88 dollars per coin.

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Unfortunately for the bulls, the sharp 35% decline from $54 to a low of $35.30 was enough to trigger the end to the uptrend. A new bullish market (on the daily charts) requires a break above the $54 dollars all-time highs. On the other hand, a breakdown below this month’s swing low at $35.30 would start a new LTC downtrend. Weak support below here can be found at $35, followed by $30 round figure. We have a bit stronger support area around $26 dollars per coin. A clearing of this area could lead to more losses.

To the upside we have weak resistance at the $47.39 swing high, followed by the $50 round figure and of course, the $54 dollars all-time high. On the long-term weekly and monthly charts, LTC/USD remains in rally mode.

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Petar Kotevski

Petar is a forex trader and writer with 9 years of experience in financial markets. He has been following bitcoin since 2010. A year ago, as the BTC market matured, he started getting more involved by writing articles on bitcoin and other alternative currencies.

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