This week on Planet Bitcoin - 3 July 2015

Friday 03 July 2015

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

It has been another week where a measure of excitement has returned to the market, courtesy of Greece. After settling in the low $240s at the end of last week, it wasn’t clear where the next move would be. Then Alexis Tsipras, calling a surprise referendum on the EU’s latest bailout proposal, effectively guaranteed a default – and with it, the introduction of capital controls. Greeks had already been withdrawing money in large quantities from their banks, which are very likely insolvent now but for their continued and limited ECB funding. The reaction to that news pushed bitcoin into the mid-$260s, which themselves have always been a critical area. When capital controls were introduced in Cyprus back in April 2013, that sparked a similar interest in bitcoin. The resulting bubble peaked at $266 (MtGox), and the same level was a sticking point on the way back down from the November 2013 bubble, too – and at various points since.

Weekly chart

Bitcoin has since dropped back into the $250s, some $10-12 higher than the previous plateau. What happens next, as ever, cannot accurately be second-guessed. In this case, though, that’s because it is news that appears to be driving the market for a change, rather than trader sentiment alone, as has been the way for the previous six months or so. Sunday’s referendum will likely provide another impetus to push the markets up (in the event of a ‘No’, and implicitly another step towards Grexit) or down. Even in the event of a ‘Yes’ and its implications for reconciliation and renewed talks, the way ahead is rocky, almost certainly including a change of government and a messy transition period as banks are recapitalised and controls lifted.

Contagion

It’s worth noting that Greeks are not buying bitcoins in amounts large enough to shift the market alone. On Bitstamp, registrations from Greek account holders are up 350%. BTCGreece, Greece’s only native exchange, has seen a four-fold increase in demand over the last month. Nevertheless, Greece still represents a small slice of the market. The critical factor is that it’s not just Greece – and it’s not just existing speculators, most of them American, who are looking to get in on the new action. Across Europe, the picture is the same. Exchange registrations and purchases are up across a number of countries. With the prospect of an uncertain few months ahead and particularly implications for the more fragile economies like Spain and Portugal, people are starting to open their eyes to the idea of bitcoin as a way of circumventing capital controls and a safe haven asset. (Bitcoin itself is prone to serious volatility, of course, but sites like Vaultoro – which offer customers the opportunity to purchase precious metals with bitcoin – are also seeing markedly increased traffic.)

Elsewhere in the Bitworld

In other news, one of the agents who helped build the case against Silk Road kingpin Ross Ulbricht has pleaded guilty to stealing more than $700,000 in bitcoin, amongst other crimes. Carl Force now faces 20 years in prison. Also under the heading of crime, an unconfirmed report has emerged that a number of Bitstamp employees were targeted in a phishing attack, which ultimately led to the theft of 19,000 bitcoins back in January, then worth around $5 million.

Finally, the Bitcoin Foundation has released details about how it ostensibly managed to burn through $4.6 million in 2014. The falling price of bitcoin was cited as a major reason (most funds are kept in BTC), but inefficiencies and expensive annual conferences, as well as eye-watering monthly expenses of $150,000 brought the Foundation to a point of near collapse recently.


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