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Analysis @$440

Bitcoin has gone up close to 20% since the start of the month and appears to be headed for a retest of the $440s resistance area. Gold has had one of the best starts to a year in quite some time as capital continues to flow to safer haven assets. I can’t imagine Bitcoin being considered a safe haven but given the volatility in the equity market, current oil prices and traders getting hammered as they try to pick a bottom, and the uncertainty in bonds and emerging markets as a whole, perhaps Bitcoin has become a target on various radars.

$12 Bitcoin

I remember way back in 2012 to when a friend of mine told me about “Bitcoins” and the price for one of these “coins” was around $12. At that point, to purchase Bitcoins one would have to set up a bitcoin wallet (which were somewhat crude by current standards) and wire the funds for purchase to one account followed by transferring these funds to a wallet owned by a “broker”. It didn’t seem like a very risk-free endeavor especially when the only use for Bitcoin at the time was for making purchases on the various black markets established in the Tor Network. I decided to forgo the wire transfer and Bitcoin fell off my radar until fall 2013.

The Silk Road

I had heard of the silk road in my research into the whole cryptocurrency, tor network, “dark net market” realm and deep down I didn’t imagine something like that would last. In October 2013 it was shut down following a breakthrough in the FBI/DEA investigation. Ultimately, it was the human factor and not the tech factor that played a key role in the downfall. Nevertheless, the authorities seized more than 70K Bitcoins worth between 30 million and 60 million depending on when they were ultimately auctioned off. Needless to say, Bitcoin made an abrupt debut into the public eye just as the price of Bitcoin neared $1K/btc. Maybe I should have taken the risk and sent that wire transfer after all… Just like I should have picked up a few of those <150 LNKD puts from the other Friday. The point is that in the same situation I would still have made the same decision but it is always interesting to watch something that the public gave little value to all of sudden be considered overvalued.

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Wired

Wired has a great two-part write up on the whole silk-road rise leading up and through the investigation that ultimately took it down.

Infographic

Oh, and if you haven’t heard of Bitcoin or want to know more about them, start with the wonderful infographic below.

infographic