This week on Planet Bitcoin - 26 June 2015

Friday 26 June 2015

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

After last week’s unexpected rally, the market has been more hesitant over the past few days. Traders took profits from the high of over $250, sceptical that there were further rises to enjoy. Since then we’ve had decreasing prices and volatility, touching $240 a couple of times but just about remaining above it – in fact, a look at the chart shows that there were higher than usual volumes as the price came down to $240 and picked up again. We’re now tracking along a near-horizontal line in the low $240s, which seems to have established itself as a point of some significance this time around.

Weekly chart

The good news is that we seem to have entered a new phase after the months of tedium, hopefully ending the period of traders playing it safe in between the odd ham-fisted attempt to jump-start the market. The bad news is that what’s shifting the market now doesn’t seem to have a lot to do with bitcoin’s fundamentals, infrastructure or even natural trading sentiment.

Greece and China

We noted last week that there were two new players to account for: Greece, which brought slightly higher volumes and bullish sentiment, and China, which piled back in, making some particularly big waves in the alt markets but helping lift bitcoin $30 higher, too.

After news that a deal was finally on the table between Greece and its creditors on Wednesday, global markets rallied – only for the negotiations to break down yet again just hours later. It’s now anyone’s guess whether they will meet the deadline for their next payment to the IMF on 30 June (using money loaned to them by the IMF, should the deal be struck). Whilst Greece alone is unlikely to be a driver of bitcoin price movements at this point, the flip-flopping of prime minister Tsipras, the IMF and European Commission may have sent signals to traders to take profits, before moving the goal posts yet again. In other words, in the Keynesian beauty contest of the markets, it’s not just what traders are doing but what traders think other traders will do that matters. More significant is that the Chinese don’t seem to have pumped any more large quantities of cash into the market; volumes on the Chinese exchanges like BTC38 aren’t anything like as high as they were last week, raising the question of whether the impressive rally across a wide range of coins was little more than a manipulated chance to sell at a profit.

Out and about in the Bitworld

With Greece’s place in the Euro hanging by a thread, Megaupload founder, political hopeful, digital currency advocate and fugitive from justice Kim Dotcom has urged his followers to take precautions, with the following tweet: ‘It is likely that a #Greece bankruptcy will trigger a market crash. My advice: Buy #Bitcoin & #Gold Both will rise when the markets crash.’ A later tweet suggested that a Grexit would be his preferred option: ‘Markets are a fragile fantasy fueled by printed money that isn’t linked to real value. Greece is a loaded reality shotgun. Pull the trigger?’

The argument over increasing the bitcoin blocksize continues, in muted form. The deal is all but done thanks to intervention from the Chinese (who, they claim, account for 60% of hashrate, and therefore get to call the shots): the hardfork to 8MB blocks will happen in 2016, with a further doubling in size every two years, until the mid-2030s when blocks could be as large as 8 gigabytes each. Grumbling unsurprisingly continues in some quarters (though nothing from hard drive manufacturers), but the strength of the hand held by the cartel of Chinese miners means there’s little doubt that the fork would be accepted.

The need for the hardfork was demonstrated by a stress test, conducted by brokerage firm CoinWallet.eu. The company tried to send 20 BTC on transactions totalling 200 MB of data over the course of 100 blocks. The network survived intact, but was able to handle just 15% of those transactions.

 


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