This week on Planet Bitcoin - 1 July 2016

Friday 01 July 2016

TL;DR they’re volatile times all round.

Bitcoin has had a choppy week. Since the crash from a high of nearly $800 almost two weeks ago, to the low of $555, it has since recovered - peaking just short of $700 - before bouncing around in a broad range in the $600s. As things stand it’s moving upwards around the top of that pattern, with traders perhaps seeking a final position ahead of the halving, due on Saturday 9 July.

From this point on, we can expect high volumes and intense volatility. There’s no way to know quite how the halving will affect price, with all kinds of issues around profitability, hashrate and block times likely to rear their heads before life calms down again. Lots of people have made lots of predictions; we will only know for sure once we get there, and the market has a way of delivering surprises.

Chart

Add to this picture the situation in the wider global economy. Brexit last week shocked the markets. The heavy falls in the FTSE 100 were erased within a week, though the FTSE 250, which more accurate reflects the state of the British economy, is still markedly lower. Sterling suffered badly, falling from $1.50 just before the referendum result was announced to as low as $1.32. Many analysts are predicting $1.30, and some believe $1.10 is possible. The markets hate uncertainty, and there’s plenty of it with a change of leadership in both major political parties on the cards, and no clear path forward for the process of leaving the EU. The likelihood of further interest rate cuts and another round of QE is placing more downward pressure on the Pound.

Good news for bitcoin is that SegWit is finally on the point of being deployed, buying time in the scalability debate and potentially serving to offset some of the issues arising from unprofitable miners turning off their rigs after the halving, causing transactions to back up as hashrate drops before Difficulty adjusts.

In the alts world, the Ethereum soft fork that would have frozen funds stolen in the exploit of The DAO has been postponed, on the grounds that it opens a potential security loophole. Both ETH and DAO have dropped in price as a result.

NXT and NEM have both seen stellar rises this week. NXT is being bought ahead of the ‘snapshot’ period starting on 14 July, which will average the amount held in users’ accounts over the following three months and use that as a basis for distributing Nxt 2.0 tokens in the project’s relaunch, called Ardor. NXT is therefore essentially being treated as an ICO token at this point. NEM is seeing traction as it secures banking relationships, with traders valuing that exposure.


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