In the last week we have witnessed sell orders of more than 1000 bitcoins at a time pushing the Bitcoin price downwards. The Bitcoin price has fallen from a stable 590 USD per Bitcoin (August 10th) to now 450 USD per Bitcoin. There have been no recent negative news or happenings that could explain the big sell offs, and one might start to wonder. I’ve recently written a few theories of why the Bitcoin price has crumbled while Venzen wrote about BitFinex’ “shorting” function. The Bitcoin price has still been falling today with more than 50 USD per Bitcoin. Is this Tim Draper getting cold feet or some inside information circulating?
The Recent Bitcoin Dump
If you look at the recent Bitcoin movements today using our Bitcoin Price Chart, you might think there has been some major events that can explain the downtrend. Unfortunately, there may not be a single explanation. People yell manipulation, other explains how it cannot be manipulation:
I’m a professional derivatives trader for a wall street bank and I get amused/annoyed when I see people call every price move “manipulation.” Actual manipulation is common in all markets, but is generally responsible for just the tiniest percentage of price moves and occurs for reasons that would surprise you.
People say it’s insider information of some sort which I highly doubt. Any information that would have a significant effect on the Bitcoin price, or the Bitcoin community in general, would have been exposed/revealed within a few hours. It has now gone more than a couple of days.
And my guess is that Tim Draper is not selling his bitcoins, not after the ordeal he (they) went through to get them in the first place, and their long term business plan.
BTC-E Dropped to 300 USD per Bitcoin
BTC-E dropped to around 300 USD per Bitcoin today, exactly why this happened is not known. One tries to explain the recent fall on BTC-E here:
A little over 7500 coins have traded hands on BTC-E in the last 15 minutes, which is right around the exchange’s daily volume traded. What’s going on? Something smells fishy in Russia… or is it Romania?
The question remains — why would anyone dump on the BTC-E market? Perhaps an algo gone awry, but everyone knows BTC-E is worthless for FIAT, a true roach motel, so any trading activity would ultimately be consummated in a withdrawal of BTC or LTC back to the traders’ wallet. Was this a vapid attempt at market manipulation to drag the Chinese Dragon?
Other markets are reacting to the sell off, with both Bitstamp and Huobi seeing a collective 5,000 BTC sold off between themselves in parallel with BTC-E.
It doesn’t make sense. If there is any happening in Russia / Romania that is negative for Bitcoin, people would not sell their bitcoins as it is much harder to transfer USD than to withdraw their bitcoins. What do you think?
Bitcoin used to be Volatile
Bitcoin has been volatile since it came into existence. The last couple of months however, the Bitcoin price has been quite stable hovering around 600 USD. Some investors (hoarders) might have become “bored” with the lack of price movement. BitFinex could have given them an easy way to bet on a Bitcoin downtrend (by shorting bitcoins), which for some might have been seen as more likely than a price rally. There have also been quite some negative and bearish comments from different users both on Reddit, CCN and other Bitcoin related sites predicting “Bitcoin’s Death”. However, I believe we have just seen the start of the Bitcoin adventure.
Is This the Best Time to Buy Bitcoins in 2014?
I have gathered a few points below that could let us know if we have hit the rock bottom of 2014 (or not). Please notice that this is pure speculation and that all investments you make are entirely your own risk. CCN cannot be held responsible.
The Bitstamp Order Book
Bitstamp is one of the world’s largest Bitcoin Exchanges, and by looking at their order book, I can’t help but get the feeling that the downtrend may end very soon. As you can see, the active buy orders are much higher in volume than the active sell orders. This means: It will take much less volume to push the price upwards than downwards with the current active orders.
A Similar Situation that we had in the Spring and Fall of 2013?
The last two Bitcoin price rallies where fueled by the Cyprus bank crisis and what I call the Chinese Fall. The Bitcoin price fell each time after the price rally, and stabilized a bit higher than it was previously. One might think that the price again has stabilized after the Chinese Fall, and is now just experiencing a short drop before a new rally begins. The question is: will there be any significant happening that will fuel a new price rally? And will there ever be a new rally?
The below image is showing the Bitcoin search interest and the last two Bitcoin price rallies correlating, posted by Jackieknows on Reddit.
As TheGalaxyWarrior reported on Reddit, Coinbase has been delaying Bitcoin purchases for a while now and will start with purchasing bitcoins again on this coming Friday, August 22nd. The reason for their halt is explained by:
Higher than normal buy volumes?
It’s impossible to predict the future. The Bitcoin price might rise, stabilize or fall even more. Please add your comments below of what you think will happen with the Bitcoin price in the coming months. I’ll leave you with this interview of Max Keiser by Alex Jones from Info Wars:
Disclosure: I own bitcoins and CCN is operated by using Bitcoin. CCN nor I are responsible for any decisions and investments you make. Trade with caution.