Every Monday, Lifting the Offer provides market analysis and price outlooks to prepare bitcoin traders for the week ahead. Check out the full archive here.
Bitcoin by the Numbers
Best Bits from Last Week
- Institutional Investor: Ben Lawsky Leaves Behind a Complex Legacy
- IBT: Bitcoin Rules Divide Wall Street's Digital Currency Community
- WSJ: Indonesians Start to Embrace Bitcoin
- Virtual Currency Regulation and Enforcement: Granting of First NY Charter and FinCEN Fine Demonstrate Continued Evolution for Virtual Currency Sector
Bitcoin Price Outlook: Neutral
The bitcoin price held steady for most of the week, offering traders little in the way of opportunities. There was no industry news of note and it appeared most traders were content enjoying the summer weather.
However, between 3am and 5am EST Saturday morning, the market began to sell-off. Among the largest exchanges trading the USD/XBT pair, approximately 12,000 XBT changed hands within that two-hour window. Trading was heaviest between 4am and 5am with approximately 75% of all XBT traded within that window.
At first glance, this trade activity had symptoms of low support against a nominal amount being sold. After a closer look at the time and volume data, this was most certainly a sell-off. Weekends are notorious for increased volatility as many traders drop off after the work week leaving only a small amount of deployable capital. This weekend was no different.
Traders will have to readjust their pricing models as the short term support was broken over the weekend. The market will need to digest the sell-off and traders will likely be slow to place bets in the first half of the week. The dust has yet to settle and support may not become visible for another 48-72 hours as traders look to get a handle on the direction of the market.
The largest question among traders is what price the market needs to cross on the way down to trigger accelerated selling pressure. This question is dependent in large part on when miners will begin to liquidate holdings at a faster pace in order to mitigate narrowing profits. The community has varying estimates as to a miner's break even price or cost per XBT mined. Estimates range from $100-$150 per XBT mined.
Historical data indicates that the trigger price may fall between $215-$220, which is certainly in striking distance. The bottom line is that the commercialization of mining has outpaced the commercialization of XBT trading and as such, sellers will continue to have the advantage.
itBit Now on Bloomberg TerminalsWe are happy to announce the listing of itBit's market pricing and order book on Bloomberg terminals through Bloomberg’s Virtual Currency homepage. Bloomberg terminal users can find the page using function “VCCY”.
This Week in Bitcoin’s (Limited) History
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Bobby Cho is the Director of the Institutional Client Group at itBit. Previously, Bobby was Vice President of Trading at SecondMarket specializing in trading bitcoin and illiquid asset-backed securities.