This week on Planet Bitcoin - 29 January 2016

Friday 29 January 2016

TL;DR The markets are mad and China is in the driving seat

It’s been a relatively downbeat week for bitcoin, after the impressive volatility we’ve seen so far this year. After the Hearn-induced crash early in the third week of January, bitcoin has failed to recover back over $400 for more than 36 hours. When it did, the charts show a single green hourly candle, always somewhat suspicious as it likely indicates one large buyer. It didn’t last, either way, and the price soon fell back to the $390s. After that, there were more sharp falls - again, $10-15 in the space of an hour - down to the $380 level and then $370.

Chart

Buyers seem reluctant to purchase bitcoins for $400 at this point, which perhaps reflects the continuing uncertainty around the virtual currency’s immediate future. Block size is still an unanswered problem, and although Classic has gained a high degree of support - at least on paper - there are some vocal opponents, core developers not least among them. The mainstream media has picked up on the controversy and Hearn’s diatribe, and widely reported it as the demise of bitcoin (not for the first time, by any stretch). It’s not made for good publicity, anyway.

Thus the picture for bitcoin has been fairly subdued. The same cannot be said, however, for the alts.

The alt markets

The alt markets have seen renewed action in the past few days. Chinese exchanges - particularly BTC38 and Jubi - have done immense volumes. As the screenshot of CoinMarketCap below shows, many have seen high double-digit rises, and in some cases triple figures.

CMC

The rises happened across the board, with almost all of the largest coins by market cap receiving a significant price bump. Within that, though, there were a few notable coins, and the odd exception.

Litecoin saw no real interest. Beloved of manipulators, who have pushed its price around mercilessly in the past, it stands apart as having remained untouched by the Chinese exchanges.

Dogecoin more than doubled in price. Quite what marked it out for such attention is unclear. Amongst the alts Doge is popular and has better liquidity than most coins, so it’s harder to create an artificial price rise. A lot of money has gone Doge’s way, at any rate.

VPNcoin saw a huge increase in price, up sixfold at one point. A coin offering built-in VPN access is a popular idea in China, where the Great Firewall restricts online freedoms, and it seems this has formed part of its appeal.

Lastly, Ethereum has also seen substantial rises. In this instance, though, the activity cannot be attributed to Chinese exchanges, because most was on western markets, for both BTC and USD. Ethereum has now tripled in price since the beginning of the year in BTC terms.

In most cases, these rises - though impressive - should be taken with a healthy pinch of salt. They do not reflect genuine adoption, and are liable to reverse in short order. Further rises may be coming, or may not; it’s little more than a matter of chance. Caveat emptor.


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