This week on Planet Bitcoin - 4 March 2016

Friday 04 March 2016

TL;DR - you can’t keep ETH down (yet), but everything else is quiet

It has been another relatively quiet week on the bitcoin front, with the price broadly stable around the $425 mark, as it was at the end of last week. There has naturally been some fluctuation, but nothing dramatic - the band of activity between $440 and $415 is nothing remarkable for bitcoin. Aside from noting that we’ve had no sign of falling back below the $400 mark, and no sign of things progressing back above $450 and even heading back to the $500 line that represents the high point for the last 18 months, there’s little more to say for now.

Chart

Ethereum is a different story. Last week saw a rise back up towards the recent high of 0.017 BTC. Three weeks ago, we witnessed what looked like a textbook bubble bursting: an accelerating rise, a final ‘blowout’ phase of a massive 30% price increase in a day, a sell-off, the ‘double top’, and finally the fall back to around half of the peak price - in this case, just over 0.08 BTC. But that was the end of the textbook account. A further decline might have been expected, but since then ETH has recovered and the price has blown past the last all-time high and touched 0.024, or just about $10. Volumes, as ever, are immense - over 50,000 BTC a day on Poloniex alone.

Around the bitworld

You could be forgiven for thinking that Ethereum had stolen the limelight from bitcoin in the last few weeks, and perhaps that’s the case. Whilst major questions remain over Ethereum’s long-term utility and viability, it is still in its earliest and most exciting phase. Bitcoin, meanwhile, is starting to look positively old and creaky. (This is, of course, an apples-and-oranges comparison - bitcoin and Ethereum are designed for completely different purposes - but crypto is a small world and there’s only so much attention to go round.) Transactions are slowing as the network becomes more and more overloaded. Even fees of 0.0002 BTC - double the standard amount a year ago - can still see transfers delayed by hours.

News of consensus and a plan about block size has not yet filtered through to the market (it seems hard to believe it was priced in given the length and sheer agony of the wrangling that has taken place). Perhaps that will happen when the SegWit patch is released in April, or the hardfork patch in July - assuming these go ahead without a hitch. The number of nodes running Classic is at an all-time high (1,409 at the time of writing), The hashrate these nodes represent is still rising, but still accounts for only 4% of blocks. The take home point seems to be that Classic has reasonable support among enthusiasts, but the big players are holding off for the Core release.

There’s been some more interest for blockchain tech in the UK, with the Bank of England’s deputy governor suggesting that central banks issuing digital money could cause problems for the revenue models of traditional banks - leading account holders up and down the country to cry into their tea.

Lastly, the traditional finance system looks like it doesn’t need much help imploding. It feels like we’re bumbling along alright at the moment, but new pieces of bad economic data keep dropping. The Eurozone has sunk back into deflation; global growth forecasts have been downgraded; and the broader consequences of a possible Brexit are openly being discussed ahead of the UK’s referendum on EU membership in June. Somewhat unnerving is that terms like ‘helicopter money’ are now appearing on mainstream news sites, almost as if readers were being warmed up to start thinking what was once unthinkable...


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