This week on Planet Bitcoin - 14 August 2015

Friday 14 August 2015

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

August’s malaise continues, with a broad picture of decline since the beginning of the month. It’s holiday season, so this isn’t entirely unexpected – traders need to take a break too, and lower volumes convince everyone to stay away a while. The same happened last year.

From its high just about touching $280 a week ago, the picture has deteriorated somewhat, starting with a sharp fall of around $10 at the weekend. A day later the recent bottom was in at the low $260s, and for the past few days bitcoin has traded within a $10 range up to around $270.

Weekly chart

It’s interesting to see that, once again, the $260s are a sticking point, both on the way up and on the way down. The market has a strong memory of this level for various reasons, as the peak of the April 2013 bubble, and as an area of high volumes and frenzied trading on the way down from the $1,200 peak at the end of 2013 – and several times since.

Around the bitworld

One place there has been significant action this week is Ethereum. Ethereum is an extremely promising and far-reaching project but, as expected, speculators had driven up the price of Ethercoin and other proxies far beyond what the market could cope with when supply actually hit the exchanges. From a high of just above 0.0125 BTC, Ether swiftly dropped to a fifth of that, since recovering somewhat, with jumps of 50% on some days.

Trading has been volatile, with huge volumes changing hands – mainly on Kraken and especially Poloniex. Volumes were initially around 1,000 BTC per day on Poloniex, a huge amount; as the week wore on, though, this did not drop, instead rising to almost 10,000 BTC per day. Overall, Ether’s volumes are comparable to Litecoin’s, at over $2 million per day – second only to bitcoin and an order of magnitude higher than anything else. Poloniex has struggled to support this volume, with its API unable to cope reliably.

Just as the Ethereum crowdsale sucked money out of the alt markets a year ago when the fundraiser was opened, trading has apparently had the same effect now, as it hits exchanges. Many of the alts have seen heavy falls, and now lower volumes, as both traders and long-term investors seek to get in on the action with Ethereum.

Because it’s August, and the silly season, there’s not much else of substance to report in the bitcoin world. Major developments are few as companies take a summer break. One piece of news that has been doing the rounds is that a security researcher has proven what most of us already took for granted – that humans are bad at picking random passwords. Ryan Castellucci’s Brainflayer software is effectively a brute-force tool that he says he wants to use to highlight how risky most brainwallets are. Brainflayer can guess 130,000 passwords a second, or around 560 million for a price of $1, if you have the right computer. Whilst stealing bitcoins from brainwallets has been a popular past-time for a couple of years now, and attacks have become increasingly sophisticated, Castellucci’s implementation is more powerful than anything seen before. The message is clear – unless you have the kind of brain that can memorise 30 random characters (the format of a bitcoin mini private key), avoid brainwallets.

I won’t be around next week, so there won’t be a news and market round-up until the weekend of the 29th.

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