I haven’t seen action in Bitcoin like we saw last night since earlier this year in the spring when the price went from $10 in January to $260 in April, and then crashed down to $50 before stabilizing in the $80-$120 range for months before beginning the latest parabolic move. I was so taken by the action in BTC China last night that I wasn’t able to sleep until 5am Rocky Mountain time, trying to buy what I could at the best prices possible. I saw every single tick. It was a crazy evening.
Yesterday I posted that while I thought BTC was at the lower end of the range at $650, there was the potential for some near-term headline risk. I thought that it might come from the U.S. banking system, but instead it came from China when they banned new renminbi deposits into the leading global exchange BTC China. While I am not saying that the price will now quickly launch to new highs, there was complete and total panic in the air last night. No question about that. In addition I tweeted that:
Remember at the peak, BTC China had a huge premium. Reasonable assumption near a low, BTC China would have a big discount. We see that now.
— Michael Krieger (@LibertyBlitz) December 18, 2013
Now I think we have a much more positive setup going forward, although a similar period of consolidation such as we saw earlier in this year is likely. The news out of China cannot get any worse, and BTC China as far as an exchange and price discovery mechanism is basically dead. The big risk now is that other nations take similar actions, but the sentiment is now sufficiently bad and people expect bad news. Last night represented the most BTC I have bought since the spring crash.
In light of all this, a reader of my blog going by the handle Anon Wibble posted an excellent comment and I have decided to republish it here. Would love to get reader feedback as well. Enjoy!
Bitcoin will prevail. This isn’t just another e-currency, this is an entire framework for communicating information and money unlike no other ever before. This is the biggest revolution since linux and the more you use bitcoin the better and more complex you realise it is.
Look at the following things:
1) bitcoin can do everything a bank can do
2) while it’s true that unlike credit cards, btc has no way to chargeback claims, also consider that in the past chargeback scams have defrauded business through payers likes paypal etc. Chargeback doesn’t prevent fraud at all, it moves the person being defrauded from one person to another. Also consider that escrow services do chargeback for far cheaper than credit cards do.
3) bitcoin isn’t just a currency it’s a protocol that can be used to exchange information, nowhere in the headlines is this even mentioned files and information can be exchanged through bitcoin nobody has even looked at this yet
4) JPMorgan wouldn’t have tried to patent their own version of bitcoin 170 times, if they didn’t think crypto currency wasn’t the future
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