Bitcoinist WeeklyNews Re-Hash:
For the last few weeks, the Bitcoin price has been on a high following bad financial news from Greece and China. Greece once again found itself staring down the barrel of a debt crisis, while China found itself in the clutches of a stock market collapse. The Bitcoin community met these ominous occurrences with optimism; the next global recession will surely give Bitcoin an opportunity to shine. The possibility of a global recession, combined with the hopes of a mass migration to Bitcoin, sent the Bitcoin price upwards until it hit resistance at $300 last week. Since then, the price has stabilized in the $280-$290 range.
Daily Bitcoin Price Action
- Aug 3: $282
- Aug 4: $281.91
- Aug 5: $282.90
- Aug 6: $279.53
- Aug 7: $275.84
- Aug 8: $278.11
- Aug 9 Open: $262.31
- Aug 9 Close: $265.39
Total Change: -5.89%
Chipping Away at the Greece-China Rally
However, during the Greco-Chinese highs, some people in the community doubted if the price spike really came from Greeks and Chinese flocking to the digital currency as a safe haven, or if the usual speculators drove the price up in anticipation of such an event. Strong capital controls restricted the Greeks’ ability to purchase Bitcoin, lowering the likelihood that many — if any — Greeks had turned to Bitcoin in the face of Greece’s possible collapse. Chinese trading did increase considerably following the country’s stock market crash, however, lending legitimacy to the claims that Bitcoin had become a legitimate safe haven asset.
New developments in the Mt. Gox debacle seemed to put a dent in Bitcoin’s Grecco-Chinese mania. On August 1, 2015, Mark Karpeles — the former CEO of the now-defunct Mt. Gox exchange — was arrested by Japanese police on suspicions of fraudulent system manipulation. The news continued into this past week, with Karpeles admitting to manipulating user balances for his own personal gain. According to Japanese media, Karpeles possibly fabricated balances adding up to “tens of millions of US Dollars.” After news of Karpeles’ arrest on August 1, the Bitcoin price fell into the mid $270s. The price returned to the $280s, but failed to go any higher after Monday, August 3.
By August 5, Bitcoin had entered a slow and steady decline. After opening at $282.90 on the 5th, the Bitcoin price gradually fell throughout the day, until closing out at $279.53. The subtle fall continued on August 6; the day opened at 279.53, and closed at $275.84.
Meanwhile, on August 5, Bing announced its decision to add Bitcoin rewards to its Bing Rewards program. This news was welcomed by the Bitcoin community as yet another mainstream acknowledgment of the digital currency’s growing relevance. The Microsoft-owned search engine chose to add Bitcoin to its rewards program as a way to expand the reach of the program in hopes of encouraging the ever-growing Bitcoin community to use Bing over Google.
The Bitcoin price attempted to rebound during the morning of Friday, August 7, returning to $280 by the start of the 9 AM hour. The recovery ended there, however, with the price stagnating between $278 and $279 for the rest of the day, despite news that Australia planned to rethink its stance on Bitcoin taxation, treating it as more of a regular currency than an “intangible asset.”
Furthermore, while the Bitcoin price was immobile, Blockchain.info made the news for yet another blunder. A problem with Blockchain.info’s pushtx-api led to a spoofed transaction, making it appear as if Satoshi Nakamoto’s long-dormant coins suddenly went on the move. The company fixed the problem, and assured the community that Satoshi’s coins did not go anywhere. However, some people were still disappointed in Blockchain’s latest misstep, arguing that the company’s many mistakes has tarnished its credibility.
Saturday morning squashed any hopes of recovery when, at 4 AM, Bitcoin entered a free fall that lasted until 6 AM. During those two hours, the price fell from $278 at the top of 4 AM to $267.24 at the close of 6 AM — making for a decline of 3.87%. The Bitcoin price went into free fall again at 1 PM following a brief return to $270 after the early morning drop. At 5 PM, the price stabilized in the low $260s and stayed there through the end of the day, closing out the 8th at 262.31.
Sunday, August 9 saw very little activity. After some small upward movement in the morning, the Bitcoin price went completely flat at $265 with only insignificant deviations throughout the day.
Where will the Bitcoin Price go From Here?
The week’s Bitcoin price activity raises the obvious question: how far will the price fall? Given the recent activity, that question is hard to answer. If Sunday’s stability is any indication of the future, we may stay in the mid $260s for a while before there is another price-moving event. However, if we take the week’s periods of sideways movement interrupted by sharp and fast decreases, the Bitcoin price may still continue to decline.
A broader question regarding the nature of recent price activity may be even more important, for its answer can reveal information about larger trends. That question is: how much of the recent price activity has been shaped by the Greek and Chinese crises, and how much of it has been determined by speculation about the crises? Judging by how fast the price has fallen in the last few days of this week, it appears as if a sizeable portion of Bitcoin’s Grecco-Chinese rally came from speculators rather than people looking to insulate themselves from potential financial collapse in Greece and China. The deep and sudden decline that happened on the 8th looks like typical profit-taking coming from speculators who believe that the price has reached an upward barrier. If this is the case, and we allocate some breathing space for more profit-taking in the coming days, then we can expect the price to flatten out somewhere between $240 and $265. At this point, it seems unlikely that speculators will drive the price all the way down to pre-Greece and China levels, since we did see an upswing in Chinese buying during the stock market crash.
Thus, for next week, it is uncertain whether or not we will see sideways action or a continuance of this week’s slow decline. It is fairly probable, though, that we will not see any significant upward movement — assuming there will not be any unexpected events that will send the Bitcoin price soaring.
What do you think the Bitcoin price will do in the coming week? Let us know in the comments below!
Images: Wikipedia, Mashable
The opinions expressed in this article do not necessarily reflect those of Bitcoinist.net.
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