A bit of recovery for bitcoin on Boxing Day

(December 26) After slumping over the holiday, bitcoin's price struggled back over $16,000 briefly on Boxing Day December 26th before falling back a ways. On December 17th it reached a high above $19,500. It then plummeted to just $10,834 on December 22.

Bitcoin's Boxing Day recovery

On Xmas day, bitcoin lost almost two percent of its value.

The price on opening on Boxing Day was just $13,917 but it rose as high as $16,079 before falling back. It just closed a while ago at $15,745 as it is now December 27th UTC.

Reaction to bitcoin's recent drop

Most market watchers expected a correction or downturn. Many consider the drop healthy and a welcome correction after the huge gains made recently by bitcoin. Some no doubt expected the downturn to continue as the bubble burst but the price appears to be recovering as it has several times before.

Tom Lee a co-founder of Fundstrat, actually raised his mid-2018 target to $20,000 from $11,500. He claims the fair value of bitcoin is $19,103 considerably higher than its current value.

Mohamed El-Erian a Bloomberg economist says that the coin's price is at a critical juncture. He argues that if the correction took money out that was invested due to excessive exuberance then the way could be open for the development of a more mature ecosystem for cryptocurrencies. This might protect investors in case there should be a bubble burst. However, El-Erian warned: "Absent this, not even the deep commitment of true believers will be enough to protect individual retail investors who would end up experiencing a price appreciation and collapse that would rival even the biggest investment bubbles in history,"

Analyst James Faucette predicts a rocky road in the future for bitcoin. He notes the small number of retailers willing to accept bitcoin in exchange. He said that bitcoin was not like a currency or even like gold. Investment analysts at Morgan Stanley even suggested that bitcoin may soon have a practical value of nothing.

Bitcoin is difficult to value making many conservative and traditional investors wary of investing in it.

Julian Hosp on bitcoin's future

Julian Hosp a cryptocurrency entrepreneur claims that bitcoin's rise is not yet finished saying: "I think we're going to see bitcoin hitting the $60,000 mark, but I also think we're going to see bitcoin hitting the $5,000 mark." Hosp is a co-founder and president of the firm TenX, a firm that is trying to make it easier for people to spend cryptocurrencies. Hosp says that the question is which level will bitcoin reach first.

Hosp said that for experts who have been in the market some time the dip was welcome. He called the elevation of the price over the last months dangerous and said: "This dip for us was very, very healthy, and some of us have used it to buy a little bit more because suddenly we had 40-45 percent discount to all-time highs."

Hosp said that he was certain that the bitcoin price will fall again. He said in the long run there would always be an up move and then a dip. He said that a consolidation of cryptocurrencies was likely in the future.

While Hosp did not see a cryptocurrency winter coming right away he said that within a year or two the market would see a big compression.

Hosp described the situation as follows: "I don't think it's going to be a bubble that's just going to burst and everyone is going to lose their money, but I think it's going to be that all the coins and all the assets with very little use or value are going to get sorted out. The money is going to flow into those assets in this cryptocurrency space that really deliver value, have new technology, and are being used by people." Hosp sees bitcoin as being more like gold than as a currency.

On December 23rd bitcoin recovers over $4,000 from its recent low

(December 23rd) A week ago bitcoin prices were nearing $20,000 while on Friday the price dropped below $11,000. Saturday the trend is back up with prices rising above $15,000 again.

Traffic is so high that popular cryptocurrency exchange Coinbase, which has already paused trading at least twice, said that it might be offline temporarily again because of the high traffic.

The week has had its share of bad news as a South Korean exchange was forced to file for bankruptcy after a second hack within the space of a few months. Coinbase suspended trading in bitcoin cash and is investigating if there was any insider trading as some observers have suggested.

Bitcoin's incredible history of rises and falls in price

Wikipedia has an an entry in the history of bitcoin that traces its price rises and falls. The most recent record rise and fall is really nothing new for bitcoin.

From its inception in 2009 to March of 2010 bitcoin was worth virtually nothing.

In March 2010 a user tried to auction off 10,000 bitcoins (BTC) for 50 dollars but there were no buyers.

On the 17th of March 2010 the now defunct BitcoinMarket exchange started with bitcoin trading at .003 to the US dollar.

On the 22nd of May the same year the first actual payment using bitcoin was transacted as two pizzas were bought in Jacksonville Florida. The price was 10,000 bitcoins. The value of a bitcoin was less than a cent.

The price made a huge leap between July 2010 when it was about 8 cents to July 8 2011 when it rose to $31.00. By December of the same year it dropped to a low of just $2.00.

On 11th of April 2013 bitcoin posted a high of $266 a coin. By June of the same year it dropped to $70.

Bitcoin breaches the $1,000 dollar mark

On November 29th 2013 bitcoin reached a high of $1242. After that, the price fell although its also rallied back twice to around a thousand.

As of January this year the price set a low of $750 before it rose again over a thousand.

BItcoin continually set records in 2017

In May of this year bitcoin broke through the $2000 mark.

By August the price had doubled to over $4,000. In September it passed $5,000.

By November 6th the price crashed through $7,000 but by the 15th of December it more than doubled again to over $17,900. But a week later on December 22nd it had fallen to 13,,800.

Present price of bitcoin

As of 3:52 December 24th UTC bitcoin was trading at $14,156.

The price at opening was $14,548 and the price had gone to a low of $13483.

Bulls and bears on bitcoin

Part of the reason for the recent rally was an expectation that more and more mainstream investors would begin trading bitcoin futures on the two major exchanges CBOE and Chicago Mercantile Exchange (CME).

The resulting dizzying rise in the price of bitcoin has prompted warnings about investing in bitcoin and other cryptocurrencies.

Outgoing Federal Reserve Chairwoman Janey Yellen has noted the currencies are highly speculative. Jamie Dimon CEO of JP Morgan Chase has termed bitcoin fraud. There are many prominent nay sayers including Joseph Stiglitz the well-known economist. who said that bitcoin ought to be outlawed.

Even Charlie Lee, founder of litecoin, advises potential buyers to purchase the coin only if they are ready to lose all their money.

However, numerous others are still optimistic as is Shane Chanel, an adviser at the ASR Wealth Advisers in Australia who thinks that the cryptocurrency craze is just starting. Chanel said that the emphasis would shift to other cryptocurrencies than bitcoin but: "I feel the cryptocurrency madness is only beginning."

Previously published in Digital Journal

Bitcoin takes huge drop below $11,000 before recovering

(December 22)At 11 a.m. Eastern Time today, December 22, Coinbase announced that all buys and sells had been temporarily disabled. This is the second time in two days that the exchange temporarily disabled buys and sells.

At just before 6 PM Thursday Coinbase temporarily disabled buying and selling but was able to resolve the issue within 15 minutes.

Bitcoin's big drop

The service interruption today came as the price of bitcoin fell below $11,000 briefly. It is down 44 percent from its record high last Sunday.

Last Sunday bitcoin established a new record high more than $19,800. On Thursday, it traded at around $15,500 for much of the day but then in the afternoon a selloff developed that gathered steam over the night. Friday morning it set a low of $10,400 but by the afternoon recovererd some to $13,100 Friday afternoon.

In just five days bitcoin lost 47 percent of its value from its high about $9,400. In just one hour Friday morning bitcoin lost a thousand dollars.

Alex Sunnarborg, a founding partner of the cryptofund Tetras Capital said in an email:"I would say the drop in bitcoin is a result of the massive new inflows of retail investors who are relatively 'weak hands' and more prone to sell at the sight of falling prices than the capital that has been in the system for a while that has a longer term outlook."

It could be that given the high prices some big players decided to selloff at a huge profit and then buy back in at a price thousands of dollars less than they paid. Perhaps there are some short sellers as well.

Bitcoin futures also declined significantly

There could have been short selling on the futures exchanges as well as investors bet on a drop in price.

Tne new CME bitcoin January futures managed to reach "limit down" as they fell nearly 20 percent to $12,265 in early morning trading Friday. They recovered slightly to $12,750 later but trading was still going on.

The earlier futures contracts offered by CBOE on December 10 also plunged down to $12,050 as there too the price volatility caused a brief halt in trading.

Bitcoin offshoot and competitor bitcoin cash also crashes

Bitcoin cash had just recently been added to the roster of the Coinbase exchange. The listing caused a huge rise in the price of bitcoin cash and a drop in the price of bitcoin as discussed in a Digital Journal article at the time.

After reaching a new high over $4,000 just two days ago the price fell back a full 40 percent to $1,873 on Friday but had recovered to trade near $2,500 by the early afternoon.

While these drops seem steep, no doubt some analysts will see them as a needed correction and perhaps even a sign that there will be a period of consolidation before any further rise. It may be that some newcomers are now panic selling trying to save some of their investment.

Bitcoin is still well up over its price at the beginning of the year, more than 1,300 percent. Bitcoin cash is also up 380 percent from when it was listed on August 1. This probably does not provide much solace for those who jumped in recently and bought the coins near their peak prices.

Jamie Lee founder of litecoin sells off his holdings

Many have warned of the risk of investing in crypto currencies. Jamie Lee founder of litecoin warned that anyone buying litecoin should do so only if they were ready to lose all their money. Lee just last Wednesday sold off all his litecoin. He might have been ready to lose all his money but I imagine he collected a tidy sum after selling his coin.

Litecoin is a competitor of bitcoin and had been rising in price lately. Just shortly before Lee sold out it had risen 8,000 percent this year.

Sell off of bitcoin was inevitable

That there was a large drop in bitcoin's price is hardly surprising. What is surprising is that it has come so late a many investors continued to hold their coin even after having made huge profits.

Benjamin Roberts, CEO of Citizen Hex a start-up based on the secoond largest crypto coin etherium (ether) said: "Investors were sitting on such significant gains that a correction was inevitable. These markets are driven in the short term by word-of-mouth adoption and profit-taking, and in the long term by the increasing utility of blockchain tech."

Problems at Coinbase

Coinbase is the leading US exchange and platform for trading major cryptocurrencies. Unitl last Tuesday it traded only three major currrencies, bitcoin the largest, etherium second largest and litecoin.

For months Coinbase had been saying that it would start allowing for withdrawing of the bitcoin offshoot bitcoin cash as of January 1, 2018. Instead it suddenly announced it would launch trading in bitcoin cash with full support.

Some think that there may have been insider trading involved before the launch and as a recent Digital Journal article reports Coinbase is carrying out an investigation.

With a huge influx of new customers, it is hardly surprising that social media sites Reddit and Twitter report that some customers are having trouble completing transactions smoothly. The company admitted Friday that high transaction volumes were causing delays in wire transfers resulting in wire deposits being delayed up to 5 business days.

South Korean and Japanese investment in cryptocurrencies slowing.

Asian investors especially from South Korea and Japan have helped inflate cryptocurrecy prices. However, China has clamped down on the market banning initial coin offerings (ICOs) and also closing cryptocurrency exchanges at least temporarily. The result has been that South Korea and Japan have dominated trading volumes and often prices are higher than on Coinbase.

One lesser South Korean exchange Youbit was hacked recently for a second time and lost 17 percent of its assets. It subsequently filed for bankruptcy. There is an investigation to see if North Korea was involved. It has been blamed for other hacks.

The Governor of the Bank of Japan said at a recent media conference that the recent surge in bitcoin prices was abnormal

However, Joe DiPasquale founder of the cryptofund BitBull Capital said: "These don't concern me for the long-term because we've seen more and greater issues in the past. Right now people are biding their time until the bottom is felt. It is a buying opportunity, perhaps in the next day, but you have to see where support is reached to make that decision."

It remains to be seen whether enough investors see this situation as a buying opportunity or whether they will simply wait for a further decline in the price of bitcoin and other cryptocurrencies.

As I ready this for posting , bitcoin has recovered considerably trading at about $14,050 and appears to be trending upward at around 1:30 AM UTC. December 23rd. Perhaps many do see this as a buying opportunity.

Previously published in Digital Journal

On December 17th bitcoin reached new high of over $19,780 per coin

(December 17th) As investors prepare for a second bitcoin futures launch by the Chicago Mercantile Exchange (CME) its price reached a new high of $19,783.06 at 12:14 UTC today , December 17th.

The next big breakthrough will be $20,000. In the last 24 hours alone bitcoin (BTC) has gained 10 percent. A year ago it was trading below a thousand. Only a month ago it was still under $8,000 less than half its price now. In the past seven days it has risen in price almost 35 percent

Everyone is wondering when the upward price flight will end or if it will continue through the stratosphere.

First futures market also boosted price

Last weekend when the Chicago Board of Exchange (CBOE) launched the first futures market prices broke through $16,000, The launch was discussed in a recent Digital Journal article. The upward boost appears to be repeating itself today.

A major part in the rallies after the future exchange launches are hopes that the future exchanges will attract mainstream investors and institutional money. The chart of the price changes also appears moderately bullish.

Social media comments predict bitcoin price to test $24,000

On social media a significant number of investors are said to be expecting bitcoin to test the $24,000 mark in the short run.

Technical analysis also exhibits signs for further upside in the bitcoin price, although it also shows overbought conditions.

Bitcoin has crashed before

The price of bitcoin is notoriously volatile and even within the recent rising tendency there have been drops of thousands of dollars.

According to Dr Daniele Bianchi of the UK Warwick Business school earlier crashes were due to hacking, regulatory interventions, or technology updates with subsequent competition from other cryptocurrencies.

The worst case arguably is the hacking of the leading exchange Mt. Gox, Wikipedia summarizes it as follows:Mt. Gox announced that approximately 850,000 bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time.[9][10] Although 200,000 bitcoins have since been "found", the reason(s) for the disappearance—theft, fraud, mismanagement, or a combination of these—were initially unclear. New evidence presented in April 2015 by Tokyo security company WizSec led them to conclude that "most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot wallet over time, beginning in late 2011."

After China banned Initial Coin Offerings (ICOs) and closed down bitcoin exchanges the price of bitcoin fell. South Korea also banned ICOs. There was also a drop after a rise when a hard fork in bitcoin was avoided recently but the price soon recovered. Some money appeared to be transferring to alternatives to bitcoin such as bitcoin cash and litecoin.

Bianchi explained: "This tells one simple story; the main risk for Bitcoin comes from external factors such as regulatory intervention and security breaches which might hit the credibility of the entire protocol and its effective usefulness as a method of payment/store of value."

He also expects that competing currencies like bitcoin cash could impact the original bitcoin currently generating all the attention : "The very open source nature of Bitcoin makes it vulnerable to competition, although the “first-mover” advantage had so far gave a gap with other competitors which is hard to close."

There are many warnings about the risks of investing in bitcoin and other cryptocurrencies including a recent one by Charlie Lee the founder of litecoin.

Perhaps the future is not ours to see, especially in this case, and we will just have to wait and see what happens. However, there are predictions in the appended video.

Previously published in Digital Journal

On December 12th bitcoin set another high of $17,615

(December 12)Bitcoin set another high today with CoinDesk recording an intra-day high of $17,615. Many analysts think that the rise could have been fueled in part by the launch of bitcoin futures last Sunday evening by Chicago Board Options Exchange (CBOE).

Other cryptocurrencies such as litecoin are also showing a surge in popularity. Bitcoin is up over 1600 percent this year according to Yahoo Finance. Yahoo lists the new high at $17,580. Perhaps this was an earlier listing than that of CoinDesk or from a single exchange. Coindesk uses an average price from several exchanges. The two are not far apart in any event.

Bitcoin price rise is not dampening demand for gold

Jeffrie Currie, head of commodities research for Goldman Sachs said that there was no evidence that the high demand for bitcoin was weakening demand for gold.

Currie said that he thinks the investors pools for gold and bitcoin are different. He also said that bitcoin's lack of regulation will keep traditional investors out of the bitcoin market.

Currie said: "In our view, bitcoin is attracting more speculative inflows relative to gold."

Currie noted that gold exchange trading funds (ETFs) are at their highest level in over four years, a sign that there is no mass exit from gold into bitcoin.

Currie said that while the lack of liquidity and high volatility of bitcoin made it interesting, it will not likely tempt investors away from the diversification and hedging benefits of gold.

The CEO of Goldman Sachs, Lloyd Blankfein said some time ago that he believes it is too early yet for the bank to consider a bitcoin strategy but that may change now that there are bitcoin futures. In November he said that while he was not comfortable with bitcoin he was nevertheless open to crytpocurrency.

Bitcoin bulls see bitcoin price up to $20,000

Price chart analysis by bitcoin bulls leads them to predict that the price of the coin could continue up to the $20,000 level.

When the price dipped over the weekend solid demand developed around the $14,000 level fueling a recovery that ended up with record highs yesterday over $17,000.

On social media some investors express fears of at least a minor pullback but the price chart analysis according to the bulls shows that the broader outlook is for the price to continue up.

Detailed analysis of the chart can be found here.

If there is a dip support is expected at the $14,000 level. Two end-of-day closes below $14,000 would negate the bullish view.

Bitcoin futures trading

Futures trading began at the Chicago Board Options Exchange on Sunday evening as described in a recent Digital Journal article. The website was not available for a time at the launch apparently due to heavy volume.

On Monday the trading went largely according to plan according to the CEO of CBOE,

The circuit breakers that pause trading when volatility is excessive were triggered twice during the first six hours of trading but were not triggered at all on Monday.

Michael Mollet, CBOE director of product development said:"The trading has been orderly. We hit a couple of our circuit-breaker halts, but those were due to price movement in futures and not due to any systems issues. We halted like our rules said we would and opened back up."

Market data show that the January futures contract is trading at around $18,000 with 197 contracts since the December 12th session began.

The Chicago Mercantile Exchange Group (CME) is expected to also launch bitcoin futures trading on December 18th.

As I write this the price of bitcoin is not far off its recent high and is at $17, 238. Check this site for the present price.

Published previously in Digital Journal

Bitcoin reaching towards $13.000

(December 5) Last night the price of bitcoin shot past the record $12,000 mark for the first time ever. No doubt to the amazement of doomsayers and dismay of short sellers the price went well over that mark.

Bitcoin's recent price

Just before a Coindesk article went to press the price of bitcoin peaked at an astonishing $12,798 well on its way to another thousand dollar leap from $12,000 to $13,000. Bitcoin is the largest cryptocurrency by market capitalization.

The low today was $11,670 so the record represents a gain of $1,128 in less than 24 hours. According to CoinMarketCap, bitcoin's price rose 9.63 percent in 24 hours and double that, 18.74 percent in the last 7 days. Trading volume has expanded slightly over the last day.

Just one year ago one bitcoin was worth $764. Over the year bitcoin has risen by 1,574 percent. Its market cap is now at $219.6 billion.

As I write this at about 11 AM Central Time the price of bitcoin is $12,619 only slightly down from its recent high.

Concerns about bitcoin mining's huge energy consumption

There are growing concerns, especially among some environmentalists, of the huge energy consumption of bitcoin mining. The issue was discussed in a recent Digital Journal article.

It is claimed that bitcoin uses more power than 159 countries including Nigeria and Ireland. A very recent article on the issue can be found in Ars Technica.

Upcoming trade in bitcoin futures may be boosting price

Just recently three bitcoin future exchanges were approved in the US and one will begin later this month. Many argue that this is partly responsible for the recent surge in the price of bitcoin.

This development will open bitcoin to a wider range of investors who will be able to trade bitcoin futures. This could result in a new surge of money into bitcoin.

While this is possible, the derivatives can also be used to make profit as an asset loses value. Investors can bet that bitcoin is overvalued and turn a handsome profit. However, if bitcoin continues on up for some time, they can lose their shirt.

Many expect a correction at any time and others even expect a crash but so far every dip has been followed by another rise and a new record high. Volatility appears likely to continue for a while.

The continuing volatility of bitcoin's price will likely limit its use and acceptance as a currency.

Previously published in Digital Journal December 6. Bitcoin thousands higher now!