It has been a solid month of gains for bitcoin and it's continuously surprising people lately. After a low dip in January at USD180, bitcoin has cranked past USD500 per coin as of 4 November 2015, and slowly started to correct from there. It seems we are coming to a plateau with the current price as of press time at USD400.
No one has been able to point directly at the sudden cause of the upswing and have been attempting to guess on mere speculative analysis. Most likely it is attributed to all the factors people have been interpreting through the price rise. A seriously scary economic crisis seems to be on the horizon as math doesn't lie, and governments economic numbers just don't add up. What is adding up is the overall price of bitcoin and its year-end value.
Last year the mainstream media had its glory with “The worst year for Bitcoin in 2014” and they were right if you competitively priced it to the US dollar every single day. If you purchased one single Bitcoin on 1 November 2013, and held it for an entire year, your coin would have gained 60% in value. If you had purchased a Bitcoin on 1 November 2014 though, your year-end investment would be a loss of 4% on the same day in 2015. In fact, the Year-on-Year (YoY) average shows that the currency lost value every day from November 2014 to November 2015 and up until the 3rd November it changed. The price has now seen a significant increase if one were to use YoY averages from November 3-4th. However, it was close to being a full losing year in YoY gains. Bitcoin has never been a loser over two years in a YoY average spread and the last time we saw some losses before 2014 was the summer of 2012 for only three months.
The massive volume in China has led many to believe that capital controls there have played a large role in the BTC rise. There have been plenty of reports from ZeroHedge and others portraying China's serious economic crisis giving the digital currency a boost. Wall Street Journal reported a group of secret markets and alleyways throughout China that could move wealth for people overseas. This has given speculation that because of Capital Controls the outflow of money may be flowing into Bitcoin from the Asian Pacific region. However, this theory has been claimed to be unlikely according to Bobby Lee, CEO of BTCC and other exchange operators in the region.
Some would point to the numerous amounts of positive news surrounding the Bitcoin industry. The digital currency and its blockchain has received a fair amount of positive attention in the media. In Europe, the Court of Justice (ECJ) had ruled Bitcoin to be exempt from Value Added Tax (VAT), and this had given the impression that the virtual money was well established now in the region. Also with the additions of exchanges like the Winklevoss Twins Gemini and Patrick Byrnes TO the financial infrastructure seems to be on the up. Recently the Nasdaq private exchange added a blockchain powered platform called Linq adding much commotion to whether Wall Street was bullish with Bitcoin. Slowly but surely the news and the confidence flowing through the community must have paid off somewhere because people have been buying bitcoins.
The price of Bitcoin shot well over 60% upwards over the course of the 24-hour chart and slowly started a downhill turn since that point. Order books are stacked on all major exchanges, and there's a lot of resistance past USD475. During the last twelve hours, the price has dipped below sub 400 levels and continued to fight upwards but seems to be losing some of its steam. The bullish wave has seen a correction, but the YoY average is still now up above 17%. The past month the price even at current correction levels has risen over 150 dollars, and arbitrage rates between the U.S. and China have had significant spreads.
The historical rally of November 2015 should slow for the next few days and find a steady anchor. Where that bottom stops is anyone's guess and my Bollinger Band plot is showing Fibonacci retracement at sub 400 levels and could sink way lower. Renewed interest by large financial institutions, legacy banks and downright positive news has led people to believe in Bitcoin again. There are many things coming up that could change the price of Bitcoin including the release of over 40 thousand Silk Road coins from the last Marshals Auction, the block reward halving in 2016, and the overall maintenance to the code itself.
Jamie Redman is a Bitcoin enthusiast, trader, journalist and graphic artist. For over 4 years Redman has been deeply infused in the cryptocurrency space. Creating a ton of Bitcoin visuals and articles for the community to enjoy, Redman continues his quest to be a candid evangelist of the virtual currency. Follow the author on Twitter @jamiecrypto
