This week on Planet Bitcoin - 27 February 2015
Friday 27 February 2015
Weekly market report and news from Dynacoins, first community-supervised mutual bitcoin fund
Once again, bitcoin is back to much where it was a week ago, but the intervening period has seen some choppy moves. The series of regular steps upwards that bitcoin made last week proved unsustainable, and instead of consolidating in the high $240s and steadily working higher, the market took an abrupt leg back down in a single long red candle.
Unlike the movements at the beginning of the year, it wasn’t a disastrous crash. Rather than falling back to $220, which might have been an obvious point since it spent so much time there a couple of weeks back, it was only a $15 correction. For several days, it repeated that same long, gentle oscillation we saw a fortnight ago, just a few percent higher in the upper $230s. Zooming out a little, we’re still seeing that same pattern of testing a higher point, rejecting it but returning to a higher low than before – on a medium-term time scale as well as a short-term one.
The temporary stability ended much as it had started: another single big move upwards, this time peaking in the high $250s – another critical point marked by several bouts of heavy trading on the way both up and down – before settling back in the high $240s once again.
From here it will be interesting to see whether that medium-term pattern will continue with progressive movements up a few dollars each time, interspersed with periods of greater volatility, or whether confidence is lacking and the market will only reliably support prices in the low $200s for a while longer.
Elsewhere in the Cryptosphere
Hacked exchange BTER is still down for trading after two weeks, though it has started to allow withdrawals of CNY and USD. Altcoin deposits are still locked and there is, as yet, no sign that the stolen 7,170 bitcoins will be recovered. The future for BTER remains highly uncertain, though they claim to be exploring options for reimbursing customers, including by selling the exchange. News is slowly emerging of other exchanges’ hacks and problems, including Danish platform CCEDK.
In other news, WordPress has removed bitcoin as a payment option from its checkout. WordPress were an early adopter, announcing they would be supporting bitcoin payments at the end of 2012. Co-founder Matt Mullenweg claimed the decision to drop it was simply due to a need to prioritise resources, since bitcoin payments represented just a tiny fraction of the company’s revenues. Although Mullenweg states he is still an advocate, the impact is more symbolic than commercial.
A good bit of press comes from the Bank of England, which explores in a report the tremendous potential that bitcoin and cryptocurrency technology have for the financial sector. It also notes the disruptive effect this could have on established services.
The UK has had an awkward relationship with bitcoin during the virtual currency’s short history. The British government wants London to retain its position as a global finance centre, and early indications are that cryptocurrencies will be subject to relatively light-touch regulation to allow businesses to access the advantages they offer. However, the banking institutions that currently reign in that same financial centre have consistently given bitcoin enterprises the cold shoulder. A series of UK-based exchanges have been forced out of business when banks simply withdrew their services with little warning or explanation. Brits wanting to buy bitcoins either have to use a peer-to-peer service like LocalBitcoins or Bittylicious, which comes with a premium of around 5-10 percent, or a Euro-area exchange like Bitstamp – which also incurs an additional cost of 5-10 percent on the market price, thanks to exchange rates and transfer fees.
This ambivalent relationship contrasts markedly with that of European banks. German exchange bitcoin.de announced this week that it had partnered with Fidor Bank, enabling instant peer-to-peer transfers of money directly from one customer account into another – meaning that fiat funds are never held by the exchange itself. This close integration marks a huge step forward in security and acceptance by the banking sector.
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