This week on Planet Bitcoin - 9 October 2015

Friday 09 October 2015

TL;DR exchanges rise and fall, and so does bitcoin...

Last week we pointed out that there had been some small but promising moves in the bitcoin markets, indicating that the long period of calm might be interrupted. The same saw-tooth pattern continues, with a spike up to almost $250 a couple of days ago, gently declining again to its current position in the mid-$240s - a good few dollars higher than this time last week, and the highest we’ve seen for over a month.

Although the recent routine has been a sudden moderate lift, followed by a gentle slope down, before repeating, there have been none of the major jumps or falls in price so characteristic of manipulation in what is still, after all, a relatively thinly-traded market. The last two or three weeks have instead seen what passes for a steady increase in price.

Chart

Does this herald anything more than just another one of the seemingly meaningless rises that have occurred periodically over the past year? Perhaps not, but there may finally be some reasons for optimism.

Exchanges changing

One of the biggest pieces of news this week is that Gemini, the new regulated New York exchange founded by the Winklevoss twins, is finally live. What effect it will have is, as ever, unclear. At the very least it brings legal clarity and some respectability to bitcoin trading, opening the way for a wave of liquidity as new investors who would never touch an unregulated exchange decide to take a punt. The days are gone when such a ‘liquidity event’ would change the price of bitcoin overnight, but in terms of infrastructure, publicity and mainstream perceptions, it’s a big step forwards.

It wasn’t all good news for exchanges, though. Altcoin exchange Cryptsy have been attacked by Coinfire, who have accused them of being under investigation by multiple US authorities after supposedly committing just about every crime that running a crypto exchange allows. Cryptsy have fought back, stating that they have never been investigated for anything and will probably sue Coinfire, who may be acting to try to move the market in their favour. Just another day in alt-land.

Speaking of the alts, they are not having a good week. The BTC bear market might finally be over, and bitcoin prices have been relatively stable for months now, but many alts have lost a substantial fraction of their market cap in recent days. Ethereum has lost half its value in the last month. BitShares has also experienced particularly heavy falls, but there are few alts that have emerged unscathed from the sell-off.

Lastly, Ethereum has been back in the news, which might explain the lack of confidence. The company has been burning through funds at an unsustainable rate and is now dangerously short of money. Whilst the technology behind Ethereum is ground-breaking, financially it has been a disaster from start to finish. Its huge BTC fundraiser back in the summer of 2014 has been blamed for the prolonged crypto bear market, since investors sold alts to buy in with BTC, and then Ethereum sold large amounts of BTC to fund its developers - and sundry other apparently unnecessary expenses. The inflationary supply of Ether also make it an unknown quantity in terms of future value. After its initial success on release, gravity has finally caught up with it in a big way and the currency stands at a fraction of its recent high.


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