Bitcoin News and Market Update January 27

Today the Bitcoin Market took a dive triggered mostly by a few news stories and a lot of panic. The biggest of these news stories is the arrest of BitInstant CEO  Charlie Shrem and "BTCking" on charges of planning a "scheme to sell" Bitcoin to users of Silk Road. Here is a link to Coindesk's explanation of what happened. While I doubt the charges will hold, BitInstant was a known Bitcoin company, that even the Winklevoss brothers invested in. Another news story that threw fuel on to the bear fire today comes from Russia. Basically the Bank of Russia issued a warning that Bitcoins are not official backed by a state, and are extremely volatile, and it can be used for money laundering and other illegal activity. Some are saying that the Russian government even claimed that those who produce (mine) Bitcoin could face charges. However, many other stories are not.

Regardless of today's panic inducing news, the overall BTC chart looks healthy. From November-mid December, Bitcoin had an astronomical 800% increase in value! This was followed by a sell-off back down to a more modest 200% rise. See Chart A below for example. However, price quickly bounced up again to 990 or so and has remained mostly range bound between 900 - 760. See Chart B for this example. I view this as healthy consolidation. After such volatility, a nice range bound market, or slowly declining market is not only expected it is essential for long term growth.  If you look at the last bubble (Chart C) A long and slow range bound period was necessary before the next big rally. I know this may be disappointing for those that bought bitcoin over 1000, but I implore you to have some patience through this consolidation. I am not too worried about Bitcoin in the long term a complete drop, unless we begin to drop under 380. Watch for resistance/support bounces at the Fib lines and historical lines in Chart B. Right now, besides my savings, I'm mostly in Fiat, and using Bitfinex to long/short depending on the market. Buying the dips and selling the rips.


Chart A

Chart B

Chart C