This week on Planet Bitcoin - 12 June 2015

Friday 12 June 2015

Weekly market report and news from Dynacoins, first community-supervised mutual bitcoin fund.

It’s been another tantalising week, the market inching this way and that without pointing clearly towards the resolution for which traders are desperate. Last week’s surprise drop to $220 seemed to indicate the start of something more: perhaps the last correction that would lead to a confirmation of the reversal. Although that drop started slowly and seemed to be gaining momentum, traders decided that $220 bitcoins were undervalued and bought the price back up to $230. As things stand, little has transpired and we are back to where we were 10 days ago. There is no clear direction of travel, no decisive picture emerging.

Weekly chart

Zooming out, in fact, very little has happened for two months and, with decreasing volatility, sideways has been the prevailing pattern for the whole of this year. In six months, there have been very few significant moves for bitcoin, and the promising appreciation three months ago came to nothing. Back in the doldrums for now, many traders are talking about a quiet remainder of the year. Sentiment, also fragile for months, is switching back towards the negative. Big news that might have catalysed a market move in different times is absorbed with barely a blink – the BitLicense regulation might have been expected to cause some sort of reaction, but nothing was forthcoming. Volumes remain low – in fact, if there’s any activity in crypto at the moment, it seems to be focused on the altcoin markets, with a degree of renewed interest from Chinese exchanges.

Out and about in Bitcoinland

The uneventful week on the markets reflected the wider sentiment in the news, with nothing of great note occurring after the BitLicense announcement last week. MasterCard is lobbying the UK government for greater regulation of bitcoin, warning of the downsides of cryptocurrency transfers compared to its own network – a clear signal that it considers virtual currency a competitor.

Bitcoin made the news again for its role in facilitating malware attacks. A study found that sophisticated gangs of cyber thieves were gaining in the region of 1500% on their investments by deploying ransomware to unwitting users’ computers, netting $90,000 per month on a $5,900 purchase of a kit that was available on the dark web. Key files are encrypted and only unscrambled when the victim pays a fee to the criminals. Bitcoin has made such transfers far safer and more permanent for the perpetrators.

In a similar vein, the rise in dark markets continues, even after the closure of the Silk Road and Evolution’s unexpected demise after millions of dollars worth of customer funds were stolen. A survey of 100,000 drug users found that 23 percent were now buying online (2014), up from 13 percent the previous year. The most popular drugs are ecstasy, LSD and marijuana, in that order. Users report higher levels of quality, lower prices and lower levels of risk and threats of violence compared to using street dealers – though there is little they can do in the case of non-delivery.

Lastly, in slightly more positive news, cryptocurrency advocate Max Keiser has raised $1 million for his new bitcoin investment fund, beating the target amount within days of launching.

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