This week on Planet Bitcoin - 6 March 2015

Friday 06 March 2015

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

This week bitcoin has made solid gains since briefly returning to its previous base in the $240s. A rally in the early part of the week pushed it well into the $270 range and then further, into the $280s. At that point, nerves and profit-taking sent it back down, though still leaving it a good $20 higher than a week back. More importantly, the all-important $260s region held (around the previous all-time high from April 2013), indicating that traders were wary about selling much lower and considered this as fair value at the time.

 Weekly chart

Since then, the market has choppily returned to the low $270s. Zooming out a few days on the chart (see above), the pattern of recent weeks continues. The market’s movements and the sentiment behind them are laid out in the series of steps that is plainly visible: the first in the mid-high $230s, the next $15 higher, and the next a slightly more chaotic leg up another $20. As before, the market has tested a higher high (almost $290 in this case), thought twice about it and returned to a point somewhat above the previous high, where it now rests for the time being.

Assuming the same pattern continues - which is never a safe assumption where the markets are concerned, and least of all bitcoin - we’d expect the next level to be around that brief high of $290, via another test of an even higher point. That, of course, requires that nothing else happens in the meantime...

Silk Road coins auction
On Thursday, a batch of 50,000 bitcoins seized by the FBI in their raid on the Silk Road was auctioned off, only a few weeks after Ross Ulbricht’s conviction. At current market prices the coins are worth $13.5 million.

There have been two previous auctions. In the first, back in July 2014, an email leak showed a number of prominent names were interested in bidding for some 30,000 coins. The bids were never made public, but venture capitalist Tim Draper is known to have bought all 30,000. At the time, market price would have been around $19.4 million. Draper has refused to disclose what he paid. Another auction for 50,000 bitcoins followed in December. This time, interested parties remained anonymous.

There is some debate on what effect this auction might have on the market. As before, the coins will be sold in blocks: 10 sets of 2,000 and 10 sets of 3,000. It is unlikely that a large bidder would sell the coins on a regular exchange in the short term - especially if they acquire them in the amounts that Draper did. Nevertheless, some traders advised caution until the auction was over and the picture clearer.

Elsewhere in Bitcoinland...
Hacked exchange BTER is still down, though is continuing to allow withdrawals of USD, CNY and some altcoin assets, but as yet none of the huge reserves of NXT and DOGE that lie in its cold wallets. Photos from amateur detectives showed BTER’s offices had been cleared out and stood empty. In a brief statement uncomfortably reminiscent of a point in MtGox’s drawn-out demise, BTER said that they had moved to a different location to work on relaunching their exchange, completely rebuilding it to solve the security issue once and for all.

In more positive news, Bitcoin Investment Trust (BIT) has been granted FINRA approval, allowing it to begin trading publicly - the first such vehicle of its kind. Once again, the effect that this will have is unclear, though it represents a significant milestone and paves the way for further regulatory approval for bitcoin financial instruments. At the very least, BIT offers a new source of liquidity for bitcoin, bringing in new investors who were previously unwilling to acquire their coins from an unregulated exchange and store them securely themselves.

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