Bitcoin Markets Blog

This week markets traded between $555/BTC and $605/BTC.  The US Marshal Bitcoin Auction just ended a few hours ago.  At the close of the auction the markets jumped from $584/BTC to $598/BTC.  This likely indicates that a bidder in the auction also bought up all the coins in the market below his bid at around $598/BTC.  If a bidder wins, he or she also would likely be willing to buy up coins for cheaper than what he paid in the auction.  If a bidder does not win, that means someone won with a higher bid also implying that he should buy up all cheaper coins on the market anyway.

This also suggests that the auctioned coins sold for above market price (considering $584/BTC the market price and those auction coins selling for at least $598/BTC) in a the immediate sense of "market price".  Ultimately, if markets are somewhat efficient, the market itself should have an expectation for what price the auction closes based on the available information it can gather (e.g. leaked list of bidders).  Given that bitcoin was trading at $630/BTC before the auction announcement, we can also say that the auction likely settled at under market price in that sense if we assume that the confounded GHash 50% effect was less than $32 in downward movement).

Also from the charts you can see someone selling coins at $590/BTC for 6 hours starting 8 hours before the close of the auction up until 2 hours before the close.  Likely that person (possibly a bidder in the auction) believed the auction would not close above $590/BTC and thus sold coins at that level in the face of upward pressure.  Then the price takes a dip to $575/BTC before shooting up.  This suggests that about 1 hour before the close of the auction, the highest bid was at least $575/BTC.

Of course this is all speculation.  A more comprehensive analysis would require looking into the tick data of exchanges and drawing more informed inferences from that.

Other News:

• In the altcoin world, Monero has been crashing from a high this week of $5.37 to $2.52, over a 50% drop.  The end of last week saw Darkcoin being dumped for Monero and this week we are seeing Monero crashing and Vericoin rising from $.07/VRC to over $.18/VRC.  
• Vericoin is a PoS coin whose main innovation is network-dependent-stake interest which increases the interest paid to stakers as the amount of staked coins in the networks increases.  This gives a snowballing incentive for stakers to stake their coins thus improving the security of the network.  you can read about here: http://bit.ly/1nDrKD8.  It also has a suite of consumer and merchant-friendly wallet features (e.g. VeriSend, VeriBit, VeriSMS).  Although incentivized staking is a nice feature, I don't see it as a big innovation.  I see the real challenge in PoS is that there is incentive for all users to stake their coins in all branches of the blockchain and incentivized staking does not solve this issue.  Ultimately, I don't personally care for this altcoin.
• Tax haven country Jersey wants to be bitcoin island: http://bit.ly/Topqbt.
• Swarm, a bitcoin crowdfunder, launches and raises 1200 BTC in funding in just 18 hours: http://bit.ly/1lWjsZW.  Swarm intends to be a crowdfunding platform where startups can raise capital from the crowd in bitcoin for equity.

Speaking of crowdfunding platforms, Mike Hearn, a bitcoin core developer, is working on a project called Lighthouse which is decentralized crowdfunding built on top of the bitcoin protocol using assurance contracts (http://bit.ly/1sLCQ19).  Anyone can create their own funding campaign directly on the blockchain and interested parties can fund the campaign in bitcoin.  Backers have the option of changing their mind and getting their bitcoins back so long as the campaign goal isn't hit yet.  Basically, it aims to be a cheaper, decentralized version of Kickstarter with take-backs.  On the other side of the valley, there's an app called Yo.

Cheers,