Mt.Gox Crash, Hollow Announcement. Blow-by-blow.

Journalist:
February 20, 2014

Technical analysis (original article below)

20h18 UTC – final update
The chart below shows price challenging the $110 level. The inset reveals the ~4200 BTC buy orders waiting at this level. Selling pressure has chipped away at this level for several hours and there is little hope those orders can cause a reversal. It looks like the bears have sub-$100 in mind… Analysis will have to be halted at this point since fatigue is setting in. More tomorrow!

14h22 UTC
Below $135 and currently resting on $130. Indicators across all timeframes are stretched to the max and this systematic grind lower reminds of the Gold crash to $1,180 in June last year. It would be dangerous to call a bottom here since there is no reason why this cannot continue into “stupider oversold” territory. A layer of ~5200 BTC buy orders wait at $110 – a very likely reversal point should the bears claw their way down there.

Traders at the Chicago Mercantile Exchange show how it’s done

13h55 UTC
Price has returned to the lows near $135 but seems unable to break below this level. Should the bears succeed in pulling price below this level (that is being challenged for the 3rd time today) then a test of each $5 level down to $100 is surely possible.

10h42 UTC
Price returned to the day low near $135 and bounced. Price should advance beyond $200 but we cannot be certain that the low of the decline has been struck.

10h30 UTC
Price has fallen to $150 – a critical support – below here we could see addiitonal decline – but beware – once a bottom is truck the advance will be rapid!

10h15 UTC
An ambiguous announcement from Mt.Gox leaves the speculation open. Direction is currently ambivalent.
Trade recommendation: BUY below $200 with an eye to returning to cash near $250.

0.89 Fib level of entire advance since 2009 has been breached

09h45 UTC
Disclosure: the writer is currently in cash and awaiting a positive announcement to buy BTCUSD (yes, at Mt.Gox) at these bargain prices. Should Mt.Gox re-enable withdrawals (even with restrictions) there is not much downside left to $0.00 and such an outcome will most likely see a relief rally to parity levels near $250 and then $500. Readers are urged to practice caution since price spikes are completely retraced in 99% of cases, so as much as price will advance, the retracements will equally be deep. Do not get caught on the wrong side of trend!

09h00 UTC
It seems that price has found support around the $150 level which is also the 0.89 Fibonacci retracement level of the entire advance since 2009. Price may hold above $150 but a breach could see $120 then $100 and finally $50 to the downside.

Mt.Gox Crash followed by Hollow Announcement

Price support was nowhere to be found

After the customary and tension-filled wait until 19h00 (JST) for an announcement from MtGox, it arrived with an underwhelming thud among stunned customers. Nothing about withdrawals. Nothing about exchange systems being updated. Not a word to the thousands of customers waiting for a hint of progress. Instead, a casual notice informing that additional staff have been employed to help process customer account verification requests.

Building up to the moment, chatter in IRC and forums reached fever pitch as heated discussion weighed customers’ options going forward. Speculation mounted as to the possible causes of a vicious sell-off that began at 16h00 JST. Many believed that someone must have had inside information regarding the details of today’s announcement. CCN cannot confirm insider trading as the cause of the sell-off and we will update readers as new information comes to light.

At 16h00 JST price unexpectedly broke below the $250 psych level and began plummeting. Within minutes price had found a new range between $150 and $200. Mt.Gox Crash.

freenode/#mtgox is packed with irate customers

Nerves were raw as time approached close of business in Japan with no announcement forthcoming. Mt.Gox customers had been asking for updates or even an ETA for announcement in IRC (left), but with little response from Support Staff who reply with pre-canned “We do not currently have any new information. The announcement will be made later today”.

Many disgruntled customers expressed their intention to withdraw funds today and this negative mood may have prompted the sell-off in part.

Some customers expressed the view that Mt.Gox had broken trust and that they intended to close their accounts and leave as soon they were able to withdraw funds (BTC or fiat). Speculation has it that Mt.Gox will re-enable withdrawals in March but with tight limits to prevent a rout on their processing systems and funds liquidity.

Live Protest Outside of Mt. Gox’ office

Live streaming video by Ustream

Do you know what caused the sell-off?
Please comment below…

Here are the day’s updates as they happened:

Update (09h30 UTC) – It would appear the market is bracing for bad news: either that Mt.Gox is insolvent or that they will once again delay withdrawals. Another outcome being discussed by customers is that the exchange might enable withdrawals but with tight restrictions.The most likely out is the latter – even if it may be that restricted withdrawals will be enabled at some date in March. Whichever way the dice fall, Mt.Gox is not the centre of the Bitcoin universe and a relief rally from current levels is highly likely – if not in the Mt.Gox price then in the other exchanges’ charts.

Update (10h00 UTC) – An announcement is expected at 19h00 Tokyo time

Technical analysis continues at the top of article all day

Last modified (UTC): April 20, 2014 18:34

Venzen Khaosan @venzen

Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect. He has found a solution to the PKI mechanism. Email me to discuss.