Bagholders Rejoice: Bitcoin Blows By $500 Mark
Bitcoin is up 30% this week. It has broken the psychologically important US$500 mark that served as a resistance level for the last two months.
At the time of this writing, Bitcoin has reached a new medium-term high of US$578.50, up from its US$547.10 high one day earlier (all prices quoted are via Bitstamp, Bitcoin’s largest exchange by volume). This price-rise comes on the heels of the digital currency’s consolidation following a decline from US$500 to US$432 in early May. Day traders were bored silly over the previous week’s uncharacteristically narrow US$20 trading range.
While it is difficult to definitively attribute price fluctuations in the short-run to changes in Bitcoin’s fundamentals, a number of positive developments over the past couple of weeks have begun to stem the negativity surrounding the digital currency:
The Bitcoin2014 conference in Amsterdam brought significant news coverage, with Overstock.com’s CEO Patrick Byrne delivering the keynote speech (see Coin Telegraph’s reports from Bitcoin2014 here and here).
BitPay, which bills itself the world’s leading payment processor for Bitcoin, added to the warm and fuzzies by raising US$30 million in a record-breaking series-A funding round.
Circle, a Bitcoin currency services provider that raised US$26 million in series-B financing, unveiled its suite of free Bitcoin financial services, aimed at making Bitcoin more accessible to the Average Joe as a means of exchange.
This is the kind of news that reaffirms Bitcoin’s Cinderella story. Following the collapse of Tokyo-based Bitcoin exchange Mt. Gox, multiple “China bans Bitcoin” news releases, and the arrest of Bitcoin Foundation director Charlie Shrem on money-laundering charges, Bitcoin could really use the shot in the arm.
It is unclear whether investors, many of whom were probably bag-holding on previous long positions, will use this uptick as a chance to recover their capital and take profits, sending the price tumbling back down to earlier levels, or even new lows.
For the time being, if you went ahead and shorted Bitcoin on margin, it might be a good time to add funds to your account in case the price rises even further and your position gets called.