This week on Planet Bitcoin - 13 May 2016

Thursday 12 May 2016

TL;DR; all quiet, still ranging, stay tuned...

It’s been another relatively sedate week, during which bitcoin has continued to trade within its established range. We had another run-up and a promising spike to $465, but so far we’ve not broken through the $470 mark that represents the long-term ceiling.


Neither, however, have we dropped below $440, which seems to be the recent floor. If the price goes outside of this range then we’ll have a clearer trend and traders will no doubt react accordingly. For now, we remain within this holding pattern.

No news is good news

Overall, the picture looks positive. Last week’s storm in a teacup is firmly behind us; Craig Wright has dropped from the news, leaving just a few half-hearted post mortems and humour pieces. Satoshi has gone back to being anonymous and his one million coins are staying firmly where they are on the blockchain, where they have been ever since they were first mined.

Meanwhile SegWit has launched, and is awaiting sufficient support for activation. Aside from capacity increases, SegWit fixes transaction malleability and may make it easier to implement other changes in the future. It has a significant following on paper; all that remains to be seen is whether miners really do put their money where their mouths are. 95% of hashrate is a big ask and will indicate overwhelming support.

Meanwhile, it’s a rough time for the alts, most of which have posted heavy losses in the last week - probably due to holders dumping them for bitcoin in anticipation of a rise ahead of the halving. There are exceptions; Ethereum has gained several percent, albeit on lower volumes than we have seen recently. DigixDAO, a gold-based fund operating on Ethereum, has made a strong debut. Having raised $5.5 million at ICO it is now trading at a market cap of $25 million, and at one point had posted a sixfold gain since launch.

Dead panda bounce?

In the real world, it’s not looking so positive. Fears over China just won't go away, with one analyst calling the recent lift in the stock market a ‘dead panda bounce’. The government’s strategy is producing diminishing returns, with new debt creating a smaller and smaller effect on GDP. The prospect of Brexit is also creating uncertainty, with polls now showing the UK’s population evenly split between staying in and leaving the EU. At present, it seems likely that Brits will step back from the brink when the moment comes, as happened in the Scottish referendum in 2014. As things stand, however, the markets are pricing in a degree of fear. Bookies (more reliable than pollsters much of the time) put the chances at around 30-40%. Either way, there will be far more clarity around the issue in six weeks. One piece of good news is that progress appears to be happening on the Greek debt deal, and in any case the chances of contagion are less than they were last time around.

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