Its time for an update to my blog, in what will probably be first of two posts, (I also have some ideas about gold I want to put out there). In any case an update feels a bit overdue as quite a lot has happened since my last post.
So, staying on topic of bitcoin for now. Last post I felt confident we’d soon break $300, which we did however now we are somewhat below $300 again. How did that happen?
What else? Well there was a massive crash down to $150 on BTC-E !!!! This is not the first time it has happened, there was also a flash crash on the same exchange, back in February 2014
Heres a look at those two flash crashes on btc-e
In a way this crash has spooked me a little bit, the first one fell a lot further but stopped at a line which I use as the absolute floor but this latest one although smaller drop went under that floor. However maybe I shouldn’t read ‘too’ much into it ..
Whats going on in btc-e, why these crashes? From various different theories I’ve read it seems likely its enabled by the low volume on the exchange. Some traders have suddenly found sell orders triggered (by some large dump?), causing a cascade of selling and these people to lose out big time and in the mad rush unable to buy back in quick enough. Whatever happened it does seem very shady and makes one wonder if some insider knowledge is involved in this moves. Anyway the fact is someone has gained some very cheap bitcoins at the expense of others who probably never dreamed those sell orders being triggered. If there are other plausible reasons this happened I’d be interested in the discussion.
In the aftermath of this flash crash I have decided to revert back to using Bitstamp for my charting for now. I previously used Bitstamp and abandoned it when that exchange seemed to have its own difficulties. It makes me ponder which exchange is best as a proxy for bitcoin in general? Maybe I should be looking at one of the big chinese exchanges? For now, and for better or worse I’ve settled back on Bitstamp.
This also give the opportunity to remove all my trendlines and start with fresh eyes on a blank slate, not that theres much there so far.
Anyway there is this nice cup shape with whats looks like a handle forming.
If that bullish pattern does play out we might be looking at some price near the top of the channel I’ve drawn in. But maybe not before bitcoin drops further to complete the handle…
In reference to my last post I don’t really think there is any particular significance to $300 except that in US dollars it happens to be a nice round number. Being back below $300 looks to me like a needed correction after some fairly large bullish moves. Hopefully before long the bullish trend continues.