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Price news
The price took a huge hit this week, tumbling from $295 all the way down to $245 within 48 hours. The drop seems to have been caused by news of the dark web illicit goods marketplace “Evolution” closing down along with all users’ funds – estimated at around $12m. Traders are apparently expecting a dump of the stolen coins on the market as the scammers attempt to liquidate their swag.
There has been a small price recovery since, but the drop seems to have taken some of the steam out of bitcoin’s bullish momentum from the previous week.
Seven-day average price: $268.31 End of week market cap: $3.7 billion
(Prices quoted according to Coindesk Bitcoin Price Index)
The UK Releases Bitcoin Regulation Proposal
In a surprise move, HM Treasury has laid out plans to regulate bitcoin businesses in the UK. The proposals have largely been welcomed by UK bitcoin startups as it will allow them to operate with less uncertainty.
The proposals are generally seen as not overly burdensome, and banking issues aside, cement the UK as one of the more attractive jurisdictions for bitcoin activity at the moment.
Evolution stolen coins arrive on BTC-e
On Saturday, a mod at Bitcoin exchange BTC-e announced that they had detected the stolen Evolution coins arriving at their exchange. Withdrawals were blocked for around 10 minutes, and users were warned not to accept coins in return for helping withdrawals.
BTC-e are one of the earliest bitcoin exchanges, and up till now its operators have remained effectively anonymous. They are rumoured to be the exchange of choice for money launderers, yet despite this they have historically been one of the most reliable exchanges in protecting user funds. This move also lends the exchange credibility in it’s desire to still play by the rules.
However, by refusing to allow the sale of the coins that came from Evolution, bitcoin’s fungibility comes into question, which in turn threatens its use use-case as a currency. For example, if you receive bitcoin in a legal transaction that at some point in the past have come from an illegal transaction, it could conceivably be difficult to use them again if they are on some sort of blacklist. This would make accepting any bitcoin a risky prospect. At the same time, BTC-e have a business to protect and should be at liberty to choose who they do business with.
Coinbase Exchange Overtakes Bitstamp and BTC-e
In a watershed moment, Coinbase’s recently launched exchange has overtaken “first-generation” bitcoin exchanges Bitstamp and BTC-e in trading volume.
Although they had a head start, Bitstamp and BTC-e have been slow to innovate since their rise to dominance post-Mt Gox and look like they are falling behind. Coinbase’s strong reputation and regulated status in the US are obviously attracting traders concerned about the less transparent models used by other exchanges. But I think one of the biggest reasons may just be Coinbase’s superior banking options – US customers now no longer need to make international bank transfers to deposit/withdraw USD funds.
Full disclosure: Neil Woodfine is an employee of bitcoin exchange OKCoin and is invested in bitcoin. The views expressed above are purely the author’s own and do not represent any organisation. None of the above should be considered as investment advice.
