Bitcoin Plunges Into Bear Market
From it's gold-matching highs at $1242 on Thursday night, the price of Bitcoin has collapsed over $400 (32%) to $840 on heavy volume. Of course, this is only a one-week low for the exuberant digital currency but still a significant plunge (as its smaller brethren Litecoin has collapsed 51% from its highs). Interestingly, this drops the price of Bitcoin in USD below the 'arb'-based price of Bitcoin in China ($965). It seems, all coincidence aside, that the BIS infamous plunge-protection-team has been re-trained...
UPDATE: BTC has rallied 26% off its lows in the last 55 minutes - with extreme volumes
Yeah with such kind of volatility, minor liquidity sparks can and will continue causing huge price fluctuations in the near future. PAT 2013
But still even after the bearish candle, the price is back to +1000.
Bitcoin's $13.50 To $1,200 Eleven Month Climb---Now Taxes
Even if you weren’t intrigued by other aspects of the rock star digital currency, it’s hard to argue with over 5,000% appreciation in less than a year. The Wall Street Journal asked Should You Invest in Bitcoin? and printed a WSJ special section: “Bitcoin or Bust“. The conclusion: sure, why not buy and hold some?
It’s easy to see why. Only 11 months ago, Bitcoin was $13.50. Its meteoric rise is downright astounding even if the price has dipped a bit since its peak. It makes some worry this bubble will burst. Plus, Bitcoin thefts soar as online criminals target easy payday after currency’s value quadruples in the space of three weeks.
Adding to its cachet, the currency isn’t issued by any bank or government. It is mined using high powered computers doing what amounts to math. Once created, Bitcoins can be traded or used to purchase goods and services.
These days, if your digital wallet has Bitcoin in it, you can buy a lot more goods and services. There are debates about just how anonymous Bitcoin is, but it is clearly more anonymous than most currencies or other forms of payment. For that reason, it has featured in some illegal activities, including the now shuttered website Silk Road.
Congress recently held hearings on the upstart currency. The Fed took notice too. In fact, Federal Reserve Chairman Ben Bernanke wrote that Bitcoin and other virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”
Bitcoins exist only online and are stored in virtual wallets. The total number of Bitcoins is not supposed to exceed 21 million. If you don’t want to try mining for yourself, you can purchase Bitcoins through websites like Coinbase.com and Mt. Gox.
Bitcoin fever is a fool’s gold rush
Until now, I’ve held off from offering an opinion on bitcoin, the most visible and popular of so-called digital currencies, that has some investors frothing at the mouth. I was waiting to see if it was for real or just a fad.
Bitcoin, it turns out, doesn’t seem to be going away soon. To the contrary, it’s becoming more popular and well known. There are more than 12 million bitcoins in circulation worth more than $12 billion. And the more people know about virtual currency like bitcoin, the more it becomes accepted, and the more it becomes an option for investors. Read about retailers that offer discounts for paying in bitcoin.
After some investigation, I’ve found that bitcoin is an interesting concept. At best, it’s a digital currency that can facilitate transactions globally. Also, as many of its investors argue, bitcoin offers some protection against potential swings in the U.S. dollar DXY +0.08% , the currency to which it’s pegged.
Even Federal Reserve Chairman Ben Bernanke, whose monetary policy franchise is threatened by an alternative currency, is on board. Last month he told Congress bitcoin has the potential to “promote a faster, more secure, and more efficient payment system” globally.
But bitcoin has some serious problems. There’s the volatility. There’s the potential for it to be used in illicit or illegal transactions. There’s the checkered track record.
As serious as those are, the big problem with bitcoin isn’t the currency itself, it’s who’s buying it and driving up the price.
And to be blunt, for the most part it isn’t the people looking for a efficient, safe global currency. It’s mostly the paranoid class of investors. They’re hoarding it to ward off what they believe is coming hyperinflation. They don’t trust the Fed. They don’t trust the government. They don’t trust central banks.
In short, they’re the gold bugs. Read: Bitcoin, not gold, has the Midas touch.
And gold bugs love nothing more than unorthodox, meaningless investments to protect themselves from the inflation bogeyman. Without a gold standard pegging the dollar, they’ve found a currency that they think will do it for them: bitcoin.
This Is, Quite Simply, The Biggest Endorsement That Bitcoin Has Ever Received
"We believe Bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money transfer providers. As a medium of exchange, Bitcoin has clear potential for growth, in our view."
That quote is from David Woo, FX and Rates Strategist at Bank of America/Merill Lynch.
Woo is one of the most genuinely brilliant minds on Wall Street, and that statement is huge.
Here's why: Lots of folks have made positive noises about Bitcoin. Ben Bernanke, for example, said it "may hold long-term promise" but mostly spoke very generally about being open-minded toward digital currencies. He never said anything specific.
Various hedge fund managers have made positive statements about Bitcoin, but you have to take their comments with a grain of salt. Most of them aren't experts in economics, and just get excited by things that go up or down by a lot (which obviously Bitcoin does in spades).
But Woo's analysis represents a top-flight mind at a major financial institution assessing it in a serious way, and coming to the conclusion that it could be the real deal.
Woo even identifies the three things that need to happen for Bitcoin to be worth what it currently is:
Our fair value analysis suggests that to justify the current Bitcoin valuation, it will need to (1) account for at least 10% of all global e-commerce B2C transactions, (2) become one of the top three players in the money transfer industry, and (3) acquire a store of value reputation close to silver.
Bitcoin is lodging into people's minds, and not just as some theoretical amusement that might one day be meaningful, but as something that can be defined and judged against benchmarks. As such, Woo's note represents the biggest endorsement of Bitcoin to date.
you may consider to trade Bitcoin via MetaTrader 4 against BTC-E. I am currently testing it, I am also testing / developing a simple MA Cross EA for BTC. Because on BTC-E you may just use plain BUY or SELL. Alternatively you may be interested in AVATrade as well, this broker offers CFD's against Bitcoins, also trade able via MetaTrader 4. Currently I am using a simple BTC bot against MtGOX to hedge my investment in BTC.
Thanks for sharing frequent updates of Bitcoins.
Bitcoin Slammed As Baidu Suspends Payments Due To "Fluctuations"
Bitcoin is being sold aggressively on heavy volume as this headline hits:
And the official, google-translated announcement from the BIDU website:
This is one of the reasons Citi and BofAML noted as 'disadvantages'and it seems Baidu agrees (for now).
Bitcoin Crashes, Loses Half Of Its Value In Two Days
It was inevitable that a few short days after Wall Street lovingly embraced Bitcoin as their own, with analysts from Bank of America, Citigroupand others, not to mention the clueless momentum-chasing, peanut gallery vocally flip-flopping on the "currency" after hating it at $200 only to love it at $1200 that Bitcoin... would promptly crash.And crash it did: overnight, following previously reported news that China's Baiduwould follow the PBOC in halting acceptanceof Bitcoin payment, Bitcoin tumbled from a recent high of $1155 to an almost electronically destined "half-off" touching $576 hours ago, exactly 50% lower, on very heave volume, before a dead cat bounce levitated the currency back to the $800 range, where it may or may not stay much longer, especially if all those who jumped on the bandwagon at over $1000 on "get rich quick" hopes and dreams, only to see massive losses in their P&Ls decide they have had enough.
Which incidentally, like gold, is to be expected when one treats what is explicitly as a currency on its own merits in a world of dying fiat - with the appropriate much required patience - instead of as an asset, with delusions of grandure that some greater fool will pay more for it tomorrow than it is worth today. Sadly, in a world of HFT trading, patience is perhaps the most valuable commodity.
As for Bitcoin, while the bubble may or may not have burst, and is for now kept together with the help of the Winklevoss bros bid, all it would take is for another very vocal institutiona rejection be it in China or domestically, where its "honeypot" features are no longer of use to the Fed or other authorities, for the euphoria to disappear as quickly as it came...
Two day chart, showing the epic move from $1155 to $576 in hours:
And longer term chart showing the overnight action in its full glory:
China Bans Financial Companies From Bitcoin Transactions
China’s central bank barred financial institutions from handling Bitcoin transactions, moving to regulate the virtual currency after an 89-fold jump in its value sparked a surge of investor interest in the country.
Bitcoin plunged more than 20 percent to below $1,000 on the BitStamp Internet exchange after the People’s Bank of China said it isn’t a currency with “real meaning” and doesn’t have the same legal status. The public is free to participate in Internet transactions provided they take on the risk themselves, it said.
The ban reflects concern about the risk the digital currency may pose to China’s capital controls and financial stability after a surge in trading this year made the country the world’s biggest trader of Bitcoin, according to exchange operator BTC China. Bitcoin’s price jumped more than ninefold in the past two months alone, prompting former Federal Reserve Chairman Alan Greenspan to call it a “bubble.”
“The concern is that it interferes with normal monetary policy operation,” said Hao Hong, head of China research at Bocom International Holdings Co. in Hong Kong. “It represents an unofficial leakage to the current monetary system and trades globally. It is difficult to regulate and could be used for money laundering. I think the central bank is right to make this move.”
Bitcoin prices plunged to $875 at 6:02 p.m. Shanghai time on BitStamp, an Internet-based exchange where the currency is traded for dollars, euros and other currencies. They closed at a record high of $1,132.01 yesterday. On the Mt.Gox exchange, the currency traded at $901, down from today’s high of $1,240. Prices dropped to as low as 4,521.1 yuan on BTC China, after rising as high as 7,050 yuan.
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