Bitcoin Trading Alert originally sent to subscribers on February 20, 2014, 10:24 AM.
For those of you short on time: in our opinion no short-term positions should be kept in the Bitcoin market.
Mt. Gox released the much-anticipated announcement today, saying that… It didn’t have that much to say at all. The most important parts of the message are below:
Thank you for your patience this week while we are working on re-initiating bitcoin withdrawals. In addition to the technical issue, this week we have experienced some security problems, and as a result we had to relocate MtGox to our previous office building in Shibuya (details can be found here https://support.mtgox.com/home). The move, combined with some other security and technical challenges, pushed back our progress.
As much as we didn’t want to only provide an “update on an update”, this is the current status. We are committed to solving this issue and will provide more information as soon as possible to keep everyone in the loop.
We are very sorry for the delays and deeply appreciate your kind understanding and continuous support.
In other words, withdrawals are still not working and we don’t know when they’ll be back. Perhaps the not knowing anything part is the worst about that new message. If the previous announcement gave some sort of roadmap, or just a single signpost saying a new update would come on Thursday (that is, today), the new press doesn’t even dispense this few details.
It is possible that the update has been a huge disappointment for traders and all those with money locked in with Mt. Gox. No date of a future update given, this could have even aggravated the situation.
On. Mt.Gox, Bitcoin went 11.0% down yesterday on weaker volume than the day before but today there’s been another round of sell-off underway. And a sell-off it is. The currency has plunged 42.0% (!!!) compared with yesterday’s close and the volume is already double what it was yesterday even though the day has still not ended (this is written just past 9:20 a.m. EST).
Even though were not fans of stating that “asset X moved on factor Y”, it seems that what spurred the traders to unwind their positions was the disappointing message from the exchange. It had been tempting to bet on positive news and a reversal, but right now one can only be glad if they hadn’t opened longs on Mt. Gox.
If a “no-news” announcement made the Mt. Gox users so discontent, it might be possible that news of favorable nature could have a similarly strong effect on the market. Consequently, we still think it might be a good idea to bet in the near future on Bitcoin appreciating strongly in a short time frame on Mt. Gox, just not now. A positive message from the exchange could provide a signal to go long.
Yesterday, the action on BitStamp seemed almost negligible and it was a third session in a row with falling volume. Things changed today because of the Mt. Gox announcement and the currency lost 3.9% on volume that is already higher than it was both yesterday and the day before yesterday at the close. Currently, Bitcoin is hovering around $600 (dashed red line on the chart) but no meaningful move below this level has been seen.
BitStamp has proved relatively immune to bad news from Mt. Gox, so would it appear. Almost 4% down is not much compared with the actual drop down on Mt. Gox. As a result, we don’t see the situation on BitStamp as overly bearish on its own. The problem, hovewer, is that any more bad news from Mt. Gox could still suppress the price on BitStamp.
Similar points can be made for BTC-e. The currency was virtually flat yesterday and the volume was relatively low. Today, we’ve seen a spike in volatility and a move 5.3% down, slightly stronger than on BitStamp. The price is now below $600 (dashed red line on the chart), but unless it moves below $500, we won’t see the short-term outlook as significantly bearish.
Again, we wouldn’t bet on Bitcoin going decisively lower on BTC-e but the situation is tense because of the developments on Mt. Gox.
Summing up, in our opinion no short-term positions should be kept at the moment.
Trading position (short-term, our opinion): no positions. If Mt. Gox resumes withdrawals, we will consider going long.
Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts
