This week on Planet Bitcoin - 2 October 2015

Friday 02 October 2015

TL;DR: A few ripples might be indicating that there's something in the water, but don't get too excited just yet...

With October underway we’re well into autumn now, so with the holidays behind us there’s the hope of kicking off the malaise that characterised large parts of the summer.

This week we’ve seen some moderately interesting activity for a change. A look at the chart shows a kind of saw-tooth pattern. From a starting point in the mid-$220s around 10 days ago, bitcoin has undertaken a series of short jumps a few dollars higher, followed by a gently-sloping decline before the next leg up. As a result, the market now sits somewhere in the high $230s, having recently touched $240. For most of the last 6 weeks, $230 has been its stable level, so this is encouraging.

 Weekly chart

As has been the case for practically the entire year, though, there’s nothing to suggest we’ll imminently be breaking out of the current range - between $200 and $300 at the limits, and usually within a far narrower range. It seems that traders have decided the value of a bitcoin is somewhere in the region of $240 for the time being. Something big will have to happen to convince them otherwise. Despite the months of calm, the memory of the cataclysmic crash from $1,200 still very much remains in the consciousness of the crypto community. The fact that $240 - just one fifth of that high - is not considered by the market to be undervalued tells you something about the degree of sheer irrational exuberance and the consequent hangover experienced by traders, so many of whom must be nursing third-degree burns and have left the market altogether.

Out and about in Bittown

The markets may not accurately reflect the activity in the bitcoin space, but that doesn’t mean it’s quiet. The infrastructure continues to grow, the equivalent of roads, houses and utilities being laid down in a new town, paving the way for an as-yet unseen influx of new inhabitants. Circle is expanding to London and is in talks with the UK's Financial Conduct Authority about adding Sterling to its list of supported currencies. Circle has very much taken a user-led approach to bitcoin, reasoning that if widespread adoption is to be achieved then the customer shouldn’t need to see it at all, if they don’t want to. As far as they are concerned, they are simply sending money in their chosen form, with bitcoin managing the transfer between countries and currencies in the background.

Other potentially significant news is that XBT Provider is launching a new bitcoin fund on the Nasdaq Nordic, expected to go live on October 5. XBT’s previous fund, Bitcoin Tracker One, is traded against Swedish Kroner (SEK), making it of limited interest. The new fund, Bitcoin Tracker EUR, opens it up to investors all over the world. Because the fund holds bitcoin equivalent to the value bought and sold by investors, this could provide significant liquidity.

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