This week on Planet Bitcoin - 27 March 2015

Friday 27 March 2015

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

After last week’s reasonable pull-back from recent highs to the $250 level, this week saw a wave of bearish sentiment overcome the market. From an apparently stable plateau it had reached around the $260 mark, bitcoin took a $10 boost and then quickly dropped away, falling into the $240s with a brief dip as low as $235. Since then the picture has improved somewhat, lifting to bump up and down around the $250 line and returning the market to where it was at the beginning of the month.

Weekly chart

The picture that emerges is of a market that is still highly uncertain, liable to change its mind at any moment. Sentiment swings one way, then the next. This shouldn’t come as much of a surprise, least of all for bitcoin. The bear market lasted well over a year, and many traders are still unsure that it really has ended. A proportion are still expecting a resumption of the downtrend, whilst others are waiting for a second drop to the recent low around $155 to prove that there really is appetite for higher prices.

Large amounts of borrowed money are sitting in leveraged positions on both sides of the market, but between four and five times as much money is long than short. One thing that is concerning traders is what happens if the longs are margin-called – forced to liquidate their positions if the market moves downwards – effectively selling more coins and crashing it further, with implications for the remaining longs. At various points in bitcoin’s history such cascading margin calls have caused deep flash crashes.

In other news...

The theft of tens of thousands of bitcoins from the Evolution dark market still looms large. These 43,000 coins – as well as the 7,000 stolen from BTER last month – can be considered gone for good. We know that BTER’s were sent to the Bitcoin Fog mixing service on the dark web, and may already have been sold. Rumours are – although they are only rumours – that some of the Evolution coins may have been converted to Dash (Darkcoin’s rebrand) for anonymity, partially explaining the dramatic rise of the coin in recent days. If that’s the case, it will soon be followed by a nasty crash as the thieves cash out again.

Dark market Agora worried its users for a while by going offline for maintenance. Given that so-called ‘technical issues’ were the warning sign that Evolution was about to collapse, this rattled some twitchy traders who recognise these illegal markets as representing one of bitcoin’s customer bases.

In more legitimate spheres, bitcoin is making in-roads into the finance sector with the news that
the bitcoin trading platform Noble Markets would be licensing Nasdaq’s X-stream technology to enable high volumes of institutional and retail trade on an official, regulated market – joining Gemini, Coinbase and others as aspiring players in the space.

Lastly, Hong Kong has indicated that it will not seek to ban or regulate bitcoin, after an enormous ‘bitcoin’ scam carried out by MyCoin. MyCoin is thought to have defrauded customers of around $387 million, promising them large returns on bitcoin investments. However, it transpired that the scheme was a straightforward Ponzi that never involved bitcoin at all.


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