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Bitcoin Market Report: 27 May 2014

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bitcoin-money-atmOver the last couple of days the Bitcoin exchange rate has continued to confirm the new phase of the long term bull market, advancing steeply towards the $600 level, with resistance at $590. At the time of writing the exchange rate has reversed its course, falling 6% to the $550 level before bouncing back to near $560.

Although, due to the very steep climb no support and resistance levels have become evident, it looks probable that resistance is at $590 with a support level in the process of forming.

 Bitcoin 14 day chart 27 May 2014

With the exchange rate looking for support, the most likely level will be around $559 where the trend line is intersected. While some may be disappointed to see the exchange rate fall back after the recent meteoric rise, the market was in a very over-bought position and a pull back was always inevitable and desirable to prevent the market from becoming too overheated. After such a steep rise the market really needs to consolidate the recent gains, such consolidation likely between $559 and $590 before making another move on the $600 level.

The new phase of the long term bull market will be confirmed around $700, and there are no doubt plenty of conservative traders willing to wait patiently for this confirmation before jumping in and pushing the market higher.

While there are many factors that will be responsible for the ultimate success of Bitcoin, two of the most crucial such factors are public awareness and availability including ease of exchange. Few members of the mainstream public will want to go to the trouble and complexity of using Bitcoin exchanges which involves bank transfers, submission of ID and loss of privacy as well as the serious and proven risk of exchanges failing and/or Bitcoin lost or frozen for any number of different reasons.

One of the most important innovations that can address all of these issues is the Bitcoin ATM which are now being deployed in prominent locations in cities around the word, a trend which is set to continue. As Bitcoin ATM's are installed in public, highly visible locations, the mainstream public cannot fail but to notice these highly distinctive machines, prompting further interest. 

The major benefit for Bitcoin ATM is ease of access and use. Few members of the mainstream public will want to involve themselves with the hassle, inconvenience and other disadvantages and risks of using conventional Bitcoin exchanges. The Bitcoin ATM is a quick, simple and convenient way to exchange fiat cash for Bitcoin and vice versa without the hassles and risks associated with conventional exchanges. The ongoing innovations and deployment of the Bitcoin ATM will be a major catalyst in the future uptake of Bitcoin, especially for the mainstream public who will expect credit card level convenience and ease of use.

The biggest risk for the Bitcoin ATM is regulation. Once, as is already the case in some locations, a Bitcoin ATM wants to turn what should be a 10 second exchange in to to a 10 minute interrogation demanding multiple forms of ID, fingerprint and/or retina scans etc, they are finished and rightly so. The future for Bitcoin/fiat currency exchange is distributed peer to peer with complete anonymity, free of governmental and bank interference.

Bitcoin Market Outlook  

Bitcoin year to date chart 27 May 2014

Even with today's sharp pull back it can be seen from the year to date chart that the up-trend remains well and truly in place, with the exchange rate retracing only as far as the trend line. Providing the market does not trade significantly below $559 for any length of time all is well with the market.

After the recent sharp rise in the Bitcoin exchange rate, heralding the next phase of the long term bull market, a pull back followed by consolidation is not only healthy, but is to be expected. Over the next day or so the market should provide a solid support level of around $559 with resistance already in place at $590, and can be expected to consolidate between these levels before making a move on the $600 level and onwards and upwards.

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