Bitcoin is down a little over 3% for the day on Friday, heading into lunch in Europe and a couple of hours before the US opens for business. The decline comes as a continuation of the overarching downtrend, but a spark of volatility at European open suggest there may be some short term action to come.
The BTCUSD is currently trading just shy of support come resistance around 577.21, having declined sharply from daily highs. The highs coincided with those of Thursday, suggesting the level could be a key one to watch heading into the weekend. The question now however is, what does Friday hold.**relatedarticle**
A couple of news releases will likely dictate sentiment. The first is that disgraced Japanese bitcoin exchange MTGox has located approximately 200,000 “lost” bitcoins in an old wallet. What effect this has on sentiment is unclear. It could serve to remind the markets of the MTGox debacle, and serve up a risk-off sentiment. In this instance, expect current resistance to hold and the pair to decline, with an initial target at early March lows around 546.40. Alternatively, it could act as a supply flood. MTGox officially reported the bitcoins lost earlier this year, and the sharp increase in supply could weaken the price. This, again, would support the bearish bias and serve up the aforementioned March target.
Other news suggests research organization Aite Group has completed its long awaited review of bitcoin. The 18-page report concluded that, while there are a number of problems that need be addressed, bitcoin is a viable alternative to fiat currency.
This could fuel a bullish bias, and offer up an initial target at early day support around 584.01. A break above this level would hint at further increases, with an initial target at 594.74 and, beyond that, daily highs (and the aforementioned key resistance) at 605.98.
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