Bitcoin prices (BTC) fell sharply heading into a volatile weekend, during which they hit their lowest levels in two weeks.
BTC is trading at $559 on BTC-e, giving back half its gains from the preceding rally, which saw it rise from $450 to near $670 within two weeks.
On Friday, BTC dropped sharply, losing 11% in less than 12 hours. The drop was likely a result of traders panicking as they learned of Ghash reaching 51% of the hashrate distribution.
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Likely also weighing on the price was news of Peter Todd, a core Bitcoin developer, selling 50% of his stake. He publicized his actions so as to avoid “insider trading”. Being intimately close with the the workings of Bitcoin, he grew concerned about “mining centralization.”
Following the sharp drop, BTC recovered nearly all of its losses only to reverse course and set a fresh low of $545 twenty-four hours ago.
BTC is now knocking on a key support level of of $560, which had been the platform for the launch of the latest leg of its rally. A breach of this level may send traders to continue taking profits realized between $450 and $560. The original cause for the rally is still largely unknown. If traders are indeed unaware of any fundamental drivers responsible for the rise, they may be more likely to cash out quickly.
The optimism generated by its finally resurfacing above the 200-day moving average has been short-lived, lasting roughly 11 days. It had struggled to keep its head above this mark, straddling both sides of it for most of the 11-day period.
BTC has also continued its recent trend of making use of long periods of flat, quiet trading as a wind-up for its next big move.