This week on Planet Bitcoin – 8 May 2015

Friday 08 May 2015

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

Another rather choppy week has seen the market jump up and down with little overall progress at the end. After last week’s encouraging move up back into the $230s, we saw a promising lift further into the $240 range. It didn’t last, and the market fell back to the mid-$230s and then lower still back into the $220s, in what looked almost like a mirror-image of last week. This time, though, it was less than a day before buyers piled back in and returned the market to the high $230s. The pattern of bumping along on a level for a few days and then moving sharply continues.

Weekly chart

At least some of these significant movements appear to be down to just one trader each time, whether that was the large short-seller who was margin called a couple of weeks back, or a heavy-hitter who is trying to move the market and establish confidence, or otherwise. Bitcoin is, sadly, still a market small enough to be manipulated by a limited number of well-resourced traders. In between these movements, volumes are far lower and ordinary traders have not the collective will to choose and hold a direction for any length of time. Thus since January the market has traded in a range between $220 and $300, and at the moment shows no sign of doing anything different. The last month has seen very little activity outside of a $20 band – an almost unheard of lack of volatility for bitcoin.

Around the bitworld

It’s been a relatively quiet week after the slew of good news and announcements from Circle last week. GBTC, the Bitcoin Investment Trust’s bitcoin ‘stock’, has finally started trading. Volumes are low, as might be expected, but it is trading well above the rates on exchanges – twice as high, in fact, meaning that people are clearly willing to pay a significant premium to own bitcoins without taking on the risks of storage themselves. This is currently having no effect on the wider price at all, likely because only a small amount have changed hands, and arbitrage with regular exchanges is impossible.

Elsewhere, there have been warnings that the bitcoin network is reaching capacity, and changes of one kind or another need to be made as a matter of urgency. Core developer Gavin Andresen has already committed to raising the maximum block size to 20 MB over the next year.

There is also the curious news that 21 – the secretive bitcoin startup that recently attracted a record amount of venture capital money – will seek to embed mining rigs in everyday household appliances. The idea would be to have a huge network of smaller miners, with each appliance returning 75 percent of proceeds to the company, leaving 25 percent for the owner.

Lastly, Ripple has been fined $700,000 by FinCEN for failing to meet the standards required as a money changer. Ripple is a unusual beast in the crypto world (and there are purists who wouldn’t describe it as crypto at all), representing a far more centralised, corporate approach than bitcoin or most other cryptocurrencies. There is a structure there for the authorities to engage with, something impossible with truly decentralised systems. Nevertheless, it is an indication that the authorities are taking the challenges posed by these new financial technologies seriously, and are willing to take them on when they can.

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