MtGox Trading Below $100. Now What?

By
Venzen Khaosan @venzen
6 years ago

MtGox BTCUSD dropped below the psychologically significant $100 mark. Continuing our blow-by-blow coverage of the spectacular MtGox crash, we’ll be keeping users updated with the latest news and price analysis going into the weekend.

Al Swearengen has only the choicest words for Mt.Gox (photo courtesy HBO)

Brief

Leading up to an eagerly anticipated Mt.Gox announcement yesterday, the exchange’s BTCUSD price crashed through $200 until settling on $110 prior to the open of the Asian trading session today. MtGox customers expected the exchange to provide details about re-enabling of fiat and BTC withdrawals. Instead the announcement left the Bitcoin community gob-smacked by simply informing of an operational need for additional staff. Price is being subjected to strong selling pressure and additional lows today are inevitable.

The fact that CEO, Kerpeles refused to give any assurances regarding customer funds during an interview with the Wall Street Journal, instead calling the matter “confidential” does not add confidence to the market.

Market confidence of a positive outcome at Magic: The Gathering Online Exchange is low. The market mood is reflected in the price chart and Magic Exchange’s price is, at the time of writing, only about 20% of the weighted market average of ~$550. Some customers are selling the rights to their “goxBTC” to external exchanges, such as bitbuilder.com, at a discount. Others have submitted the fate of their bitcoins to destiny and are trading them through the stormy peaks and troughs engulfing the exchange price. Without a positive outcome, the efforts of these traders, as well as the high risk investment of those exchanges offering credit default swaps, will all be wiped out.

 

Speculation

There is ongoing talk of pending insolvency and willful market manipulation. Mt.Gox has now thrown caution to the wind by ignoring customer demands for answers. Additionally, relocation of their offices, last week, from ground floor premises to a Tokyo office tower has fueled speculation that more disappointment is in the pipeline.

Andreas Antonopoulos expressed concern in a tweet yesterday:

 

The Gox relocation, delay and more bad communication shows that the problem is one of management. Won’t be fixed with a patch.

 

Occupy Mt.Gox street protests continue and the mood directed at Mt.Gox is grim.

Say-it-as-it-is ZeroHedge says yesterday’s limp announcement in the face of crisis had “slammed the coffin shut on what was once the largest Bitcoin exchange.”

Staff writer Tyler Durden reminds us that:

Bitcoin is no longer in Phase 1 of its evolutionary cycle. I believe Phase 2 for Bitcoin began in earnest back in November 2013, when the Senate Committee on Homeland Security and Governmental Affairs held its first hearings on the topic. Those hearings made it clear that, at least for the moment, no significant roadblocks would be put in place to prevent people from transacting with one another using the crypto-currency. Phase 2 also saw the largest Bitcoin investment to-date, a $25 million infusion led by Silicon Valley VC firm Andreessen Horowitz, as well as acceptance by major U.S. retailers, with Overstock being the most significant. Bitcoin is becoming serious, and serious means serious accountability.

 

Forced Selling

Effectively, those Mt.Gox customers who fear for the safety of their funds in the hands of the exchange, have no option but to sell bitcoin holdings. Since Mt.Gox imposed a halt to BTC withdrawals for all customers, the only way to reclaim funds is to convert to fiat. The effect on the price of Bitcoin is devastating – not only at Mt.Gox but for all exchanges who are seeing their business harmed.

 

Technicals

16h37 UTC
$115 breached. If price holds below it we may be in for a sub-$100 weekend.

16h03 UTC
Our support and resistance levels were well chosen it would seem, as price has respected them across three trading sessions. Additionally the lower blue trendline was the scene of altercation and price is now doing battle where this line intersects with $125. Downward momentum has been broken but this has not stopped the bears for the two week duration of the decline. Advances seem opportunistic at this time (as opposed to being the start of a new trend up) but let’s not jump to conclusions. A break below $115 or above $160 will serve to clarify the market’s directional bias. For now ranging behavior between the cited levels seems the game.

13h05 UTC
3rd attempt at scaling $160 was rejected which means some downside will follow. How far down? Likely levels are $125 and then $115 – but every round $5 level on the way down should give some resistance.

11h54 UTC
Price is ranging between the $140 and $115 levels. It has moved through this area in an expanding structure as evidenced by the blue channel lines. This kind of structure is usually associated with a correction in the market and heralds more lows to come. However, this is not 100% certain and a break above $160 will give us additional clues. Dropping below $115 may prove terminal for the hopes of further upside and see price below $100 again.

09h48 UTC

Price has twice been rejected at $160 and is currently below $150. It is hard to read the intention of trend here, but given the mood and the low expectation of getting their BTC back, it would seem the Gox market are trading “gung ho” style and grimly sell at every high in order to buy back in at ever lower prices.

05h25 UTC
Price has returned above $100 but is having difficulty escaping the gravity of sub-$100 bearish intentions. A strong rally to $150 was stopped in it’s track with price pulled back to $130 within minutes. Is this the reversal? Continuation above $160 will give some weight to that notion, but $200 will offer resistance. Back below $110 being the sign of the bear.

Last modified (UTC): February 21, 2014 17:39

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