Bitcoin plunged as low as $868 on MtGox in weekend trading before making partial comeback to the familiar level of $920. The low point of $868 was its lowest in 10 days when it briefly touched $859.
The descent had already begun late last week and marks another lengthy period of selling, lasting close to 48 hours and surpassing the duration of the sell-off earlier last week when traders were discouraged by the continued no-go with Chinese authorities.
These prolonged periods of decline should serve as a warning signal to traders looking for a breakout anytime soon. Its recovery back to its safe-haven level of $910-920 has been unimpressive considering the initial scale of decline.
Traders and enthusiasts are terming such sell-off’s as “Dump those BTC Weekends”- which had actually taken a pause as of late.
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The sell-off comes at a time when the US Attorney’s office for the Southern District of New York announced the forfeiture of 29,655 bitcoins from the Silk Road server. The stash is equal to roughly $28M based on BTC”s current value. The bitcoins are to be auctioned off, although a date has not yet been released. The prospect of having a large quantity of BTC flooding the market may have motivated traders to consider the consequences of excess supply. In the grand scheme of things, the total quantity should not be enough to make a significant dent in the market. The amount represents no more than 0.14% of the total float. Also, the rate of diffusion into the market is still unclear at this point and will largely depend on what happens at the auction, which in of itself will be interesting to watch in terms of its price correlation to other exchanges.
The silver lining is BTC’s continued resilience in maintaining its $870 support level. The bounce-back marks the 5th time in 2014 where BTC has convincingly defied this level.
The recent patterns lend further support to the theory of mid-term stabilization around the low 900’s, until the next major development shakes things up.