This week on Planet Bitcoin - 3 June 2016

Friday 03 June 2016

TL;DR it's getting interesting.

Things are heating up on Planet Bitcoin. This time last week, the market punched through the long-term $470 barrier. That has been a ceiling for months, so it was pretty significant whatever happened next. As it turned out, it wasn’t the end by a long shot. After another jump upwards and a brief pause below $500, traders decided the bitcoin was still undervalued and bought it up another $50. The price is currently hovering around $540.

 Chart

We’ve seen some serious volatility and some strange things going on with the Chinese exchanges. The price of bitcoin has come adrift from other exchanges, diverging by a huge amount. China has apparently been throwing money at BTC again, thanks to the weakening Yuan which has seen traders look for hard assets to hedge their currency. Right at this point, things are relatively stable again, but that can’t last.

Aside from China, there are probably another couple of factors to credit for the rise. There’s the Halving coming up, but that’s been a known event for a long time. Likely there’s some balance between taking a long position early enough to enjoy the benefits, versus paying interest on leverage for that period of time. A flood of money also exited Ethereum in the last week as the DAO stopped accepting ICO money and started trading; ETH lost a third of its value in short order. LISK has also stabilised somewhat, around 0.0006 BTC, around four times its ICO value. Now that the frenzied activity around these two has abated, much of that attention may have shifted to BTC. Right at this point, it’s worth noting that bitcoin is at its highest for almost two years, and looking like it’s in a solid uptrend. That in itself will attract more traders.

Out in the bitworld

Elsewhere, bitcoin has received a nice bit of publicity in Australia, where the government is auctioning over 24,518 BTC the police have confiscated as the proceeds of crime. Like the US government’s auction of the Silk Road coins, this has the function of further legitimising bitcoin within that jurisdiction. As one economic historian commented, ‘Any time a government sells bitcoin, it is acknowledging that this is a different asset to drugs, for example, that would not be sold in an auction… Australia has been going through its own regulatory process - and this makes a standing that bitcoin is legal to use in Australia.’

The timing is also significant, with the Australian authorities selling ahead of the halving in the recognition that prices are currently high but will be unpredictable due to the effects of reduced supply but potentially also reduced security if miners are forced offline.


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