Bitcoin Trading Alert originally sent to subscribers on April 22, 2014, 1:45 PM.
If you’re in a hurry: we still support short speculative positions in the Bitcoin market.
In our Bitcoin analysis on Apr. 18 we mentioned “Save Gox” – the initiative to rehabilitate the failed exchange Mt. Gox, generate revenue and pay back what is owed to creditors. The International Business Times has come up with more details of the plan:
"This is about bitcoin and preserving the value of the bitcoin ecosystem," said John Betts, an investor and finance and tech adviser with Sunlot Holdings, the firm backing the plan.
(...)
“The survival of MtGox can send a powerful message to the broader public and regulators,” Sunlot wrote in its appeal to the firm’s creditors. It told creditors it hopes to relaunch the exchange with better security features, and it wants to channel a portion of its revenue to a recovery fund for Mt. Gox's former customers and creditors.
That plan has attracted the support of the creditors that owned more than 70 percent of Mt. Gox’s lost bitcoins, according to Betts.
(...)
Sunlot boasts a broad and experienced range of investors, including online businessmen Brock Pierce and Jonathan Yantis, and venture capitalists William Quigley and Matthew Roszak, from Clearstone Venture Partners and Silk Road Equity, respectively.
If the part claiming that creditors owning 70% of Mt. Gox’s debt are onboard is true, than this would be a serious pull toward rehabilitation. Of course, the Tokyo District Court doesn’t have to take this into account but it most probably will. The question here is if the will of the creditors alone is enough since the court may still liquidate the former exchange based on difficulties in establishing how much the assets and liabilities of Mt. Gox are actually worth and what actually happened with customer bitcoins.
One way or another, having 70% of money (if this is actually the case) might provide the Japanese court with an additional incentive to look thoroughly at the possibility of rehabilitation.
Now, let’s have a look at the charts.
Yesterday, Bitcoin edged lower on BitStamp on relatively low volume. The currency ended the day slightly below $500 (dashed red line on the chart). There was no significant action but the short-term outlook remained bearish.
Today, we’ve seen more of the same. Bitcoin has barely budged lower and the volume has been relatively meager (this is written before 1 p.m. EDT). The currency is still below $500. We’ve seen stagnation and right now we’re betting on it being followed by declines in the near future.
On BTC-e Bitcoin went 1.2% down yesterday to close below $485. The volume was weak and the short-term outlook was slightly more bearish than on BitStamp in that the currency seemed to have moved further away from $500 (to the downside).
Today we’ve seen more weakness, relatively small trading volume and not much apart from that as the action has barely taken Bitcoin lower (0.2% lower).
This seems to be one of those less exciting days in the Bitcoin market (it is not over yet, mind). But even such days are important for the investment outlook. Bitcoin might not have moved down spectacularly but it hasn’t appreciated either. We’re still below $500 on both major exchanges. We haven’t seen any indications of a possible move up and we’re viewing the current stabilization at $500 as a pause after the recent correction (the recent move up). We’re betting on more depreciation once the period of stagnation is over.
Summing up, in our opinion short speculative positions might become profitable.
Trading position (short-term, our opinion): short, stop-loss at $550. The move down might resume after the current period of stabilization.
Thank you.
Regards,
Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts
