This week on Planet Bitcoin - 17 July 2015

Friday 17 July 2015

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

The end of last week saw a dramatic rise from a base around $270 up into the $280s, then moving higher over the next couple of days to peak at well over $310. The initial rise was ostensibly fuelled by the Litecoin crash, as a group of traders finished a highly successful market manipulation and cashed out to bitcoin. The next leg up was probably a response to this – the market’s over-optimism at the rise – along with the apparent likelihood, at the time, that Greece would leave the Euro. A hope that the long downtrend was decisively over, at last, prompted many traders to buy, with the news on Greece providing a context and justification for their decision rather than changing the fundamentals.

Chart

The result was a rise for which the market was plainly not yet ready. It is the third time that bitcoin has passed $300 since the beginning of the year; each time, the move has lasted no more than a day or so, at most. This time was no different. The resolution came on Monday, with a $20 fall in the space of just an hour, down to $285. After oscillating around $290 for the next three days, we then saw a fall back to the $270s – wiping out almost all of the week’s gains.

As is usually the case, in the process of these big moves huge amounts of money were added to and wiped off the market caps of the alts. Litecoin’s value has been cut in half from its high, and many other alts have suffered multiple double-digit falls.

Around the bitworld

China continues to be an erratic participant in the market, treating crypto as somewhere between a roulette wheel and a rigged poker game. Greece’s immediate crisis seems to have reached a resolution, if only temporarily; arguably insurmountable long-term problems remain, but the risk of Grexit in the coming days seems to have passed, and traders are no longer using that narrative to inform their decisions. The irony is that Greece is now likely to be a larger participant in the crypto space as the banks reopen and capital controls are slowly lifted; prior to this the interest has been real but mainly symbolic. Bitcoin’s network problems have also apparently eased. Stress test or attack, transactions are moving more smoothly now.

A key development was the release of the NanoCard by Danish exchange CCEDK. This is a fiat debit card but, unlike pre-paid cards, it enables funding in realtime from a bitcoin address as the money is spent. Along with other measures to enhance enhance security by essentially turning exchange accounts into regular wallets, this combines the independence of crypto with the convenience and universal acceptance of major card providers. Future iterations will enable funding by BitShares’ SmartCoins to mitigate the volatility risks of bitcoin and current altcoins, while preserving the advantages of decentralisation. Given that remittance is a $500 billion market and fees to send money home can be as much as 10% (especially for migrant workers in low-income countries), this represents a promising application.

Finally, Russian President Vladimir Putin has made some remarks about bitcoin that, whilst showing scepticism and ignorance about certain elements (such as what ‘backs’ virtual currencies), demonstrates more openness to exploring their benefits than has previously been the case. The comments represent a continued trend of relaxation in Russia’s harsh stance on cryptocurrency.


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