Bitcoin a Buy On Rumor, a Sell On News
July 25, 2014 by Eric Wagner
Image credit: Antana Coins
Over the past few months we have been reporting on a string of big wins and success for the nascent bitcoin. The biggest names in e-commerce and retail shopping have all begun to adopt the new currency and many more are expected to join the wave very soon.
In the past six weeks alone, bitcoin has received main street acceptance from such big names as satellite TV provider DISH, PC powerhouse Dell, global florist 1-800-Flowers, and small business software central Intuit Quickbooks.
Moreover, the bitcoin market was given a good jolt of enthusiasm after big tech entrepreneur turn political plunderer Tim Draper was revealed to be the winning bidder of the entire lot of Silk Road bitcoins confiscated by the Federal Government in the first ever US auction of bitcoins.
More than just establish a floor for the value of the cryptocoins, the fact that the US government was able to sell it so successfully adds a layer of support and psychological acceptance that is beyond monetary value. In essence, it can be viewed as Uncle Sam giving a big thumbs up to the new technology.
So it was a big surprise to see the charts showing that the relative price of bitcoin was down below $600 yesterday against the US dollar. With all the hype and hoopla surrounding this fascinating new global currency, it ill behooves the imagination.
As regulators mull over introducing legislation on digital currencies, bitcoin businesses and consumers are waiting to see just how these new rules might affect them.
Underlying market forces, like physics, cannot be changed even by the hottest hype. Fundamentally there is still the inherent lack of liquidity in this market as too many coins are sitting in too few wallets. As with all market movements we see growth in waves and usually there is a corresponding smoothing of one wave before another appears.
The winds of change keep blowing into the mighty sails of the cryptocurrency, setting it in motion faster and with more force than anyone can fully imagine. Realizing it now, simply comparing it to the dollar is in and of itself a distraction from the monumental force of change that is at our doorstep.