- Published: Monday, 24 March 2014 08:21
- Written by Editor
Even though the Bitcoin exchange rate has been sliding since the demise of Mt.Gox, a poll carried out by Bitcoin Reporter on 23 March 2013 highlights a very high level of ongoing support amongst speculators who survived or avoided the Mt. Gox failure.
Of the 225 that have voted in the poll at the time of writing, an overwhelming 84% are holding or would buy Bitcoin while only 12% are selling or out of the market altogether. So what does this say about market sentiment and short term prospects?
Overall the market and Bitcoin in general is re-grouping after the ongoing fallout from the Mt. Gox debacle which provided mainstream media with an endless series of ammunition with which to attack Bitcoin with propaganda, misinformation and sensationalism, all designed to debunk Bitcoin and scare the general public away. While this is unlikely to exert an influence in the longer term, in the short term all of these factors have conspired to deter new participants from becoming involved with Bitcoin in any significant market moving way. Bitcoin purchases will be much smaller than was the case in the bull market of November and December, and not in significant price moving volume as has been witnessed in recent weeks.
The high market moving volumes of November and December were clearly largely focussed on the Mt. Gox exchange, with speculators storing both fiat currency and Bitcoin at the Mt. Gox exchange, buying and selling as required. By the time it became apparent that Mt. Gox was in big trouble many people had liquidated Bitcoin positions for cash, but could not withdraw neither Bitcoin or cash, leaving 750,000 Bitcoin frozen and at the mercy of Mt. Gox which is where they are today pending further news.
200,000 BTC have since resurfaced under extremely suspicious and doubtful circumstances to say the very least, but are under the control of the bankruptcy system.
If Mt. Gox was indeed the primary vehicle for speculation, as seems highly likely, then unfortunately many previously active market participants of the rampant bull market will no longer be participating.
In the absence of new large scale participants the market direction is largely dictated by existing speculators who fortunately did not lose their stake at Mt. Gox, either by using an alternative exchange such as BitStamp, of holding Bitcoin and cash in securely at home.
In a poll carried out by Bitcoin Reporter on 22 March 2013, with 374 voters at the time of writing, 58% voted that they are currently bullish on Bitcoin with 42% bearish. Those bullish on Bitcoin most likely correspond with those who voted as holding or buying Bitcoin in yesterdays poll, with the emphasis probably on holding rather than buying during the current down trend. Those who are bearish are probably more likely to sell as the market declines, causing further ongoing weakness in the exchange rate.
Overall then the current market outlook is neutral to weak.
Bitcoin Weekly Outlook
The current price weakness is reflected by the progressive convergence of the 50 and 200 day (purple) moving averages.
A crossing of the 50 day moving average down through the 200 day moving average would be a bearish convergence which could see further declines below the $500 level.
The 50/100 convergences have already taken place and a heavy toll, signalling a £$200 fall in the exchange rate.
The current market weakness is also confirmed empirically by the fact that a constant slew of positive news has failed to impress the market significantly, whereas any negative news takes $20 - $30 straight off the exchange rate.
For the market to turn around from here to resume an up-trend, no more negative news should surface while positive news becomes bigger and more frequent. While most speculators are holding their positions, further new money needs to be committed to Bitcoin to resume and sustain the up-trend which will only happen after a period of price stability and upturn from positive news thus removing any fear, doubt and apprehension from the market.
There are always big investors and speculators waiting to enter Bitcoin with market moving orders given the right conditions, and should they choose to do so could trigger a turn towards more positive sentiment reflected in a resumed upwards trend in the exchange rate and avoidance of any further bearish signals.
Vote In The Poll