This week on Planet Bitcoin - 22 April 2016

Friday 22 April 2016

TL;DR don’t look now, but things might be happening...

After several weeks of consolidation and a gentle upwards slope in the $400-430 range since the beginning of March, the expected move finally happened and bitcoin broke out to the upside.

The move higher was only $10-15, which is not huge given bitcoin’s history of volatility, but it remains significant because BTC was trading within such a narrow range for such a long time. There have seldom been such extended periods of consolidation in bitcoin’s history, and a jump upwards at the end was by far the most likely outcome. What happens next is less certain, but it does seem that a higher degree of confidence has returned to bitcoin than for some months. We are not far from year-to-date highs around $460, and indeed the moves above $500 we saw last year were brief, hype-driven (Coinbase’s ‘regulated exchange’ announcement; Grexit fears) and unconvincing. Zooming out to the year-long scale, the overall picture is optimistic:

Year chart

Expectations around the Halving may have something to do with that, despite potential concerns about hashrate dropping on reduced mining rewards, and the effect that could have on block times.

Ethereum is also picking up a little, after losing more than 50% of its value since its highs; it is consolidating around 0.019-0.02 with a higher move potentially on the cards. Against that possibility is BTC’s rise; most alts have had a bad week, as they usually do when bitcoin rises. Ethereum’s relationship with BTC is still too new to characterise, but bitcoin is likely to grab some limelight and dollars for a while now.

In the real world...

Out in the mainstream markets, it’s a mixed picture. The Dow Jones topped 18,000 again and is approaching all-time highs, despite oil dropping once again as oil-producing nations failed to reach consensus around limiting supply.

Mervyn King, former governor of the Bank of England, has joined other central banks in warning that monetary policy is nearing the limit of what it can achieve. That points to a more radical ‘solution’ for the world’s debts and lack of growth - namely accepting the inevitable and taking the hit. Greece has been back in the news again after it, the IMF and European leaders disagreed about the terms of the country’s latest bailout instalment and the issue of debt relief. It’s an open secret in the IMF that Greece doesn’t stand a chance of repaying its debts under the current terms. Adding to the tension is a document published by Wikileaks that apparently records the IMF’s lead negotiator suggesting they should bring Greece to the brink of default again, since this is the only way to secure an agreement. Further clouding the issue is the possibility of Brexit; bookies are currently giving odds of 30-40% that the UK will leave the EU, which would cause financial turbulence that will have major implications for Greece and the rest of Europe.

Back in Bitcoinland, SegWit has finally been published and nodes will soon be able to upgrade to the new software, which aims to give bitcoin some elbow room while we wait for a block size increase.

Elsewhere, ShapeShift’s CEO Erik Vorhees has written a long post explaining what happened to the instant exchange service; the short version is that they were betrayed by an employee to the tune of $200,000. No customer funds were lost due to ShapeShift’s business model.

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