Bitcoin - Refuels the 'What is Money?' debate

Thursday, April 4, 2013, Marketing Communication Bitcoin developments refuel the 'What is Money?' debate Bitcoin has been in the news as the online currency has seen some sharp gains in recent days, see graph below, reportedly due to increased demand following the developments in Cyprus. Clicking on the link above will open a quick but informative slide show on Bitcoin from Business Insider. Alternatively a more in depth article on FT Alphaville is available if you click on the image below. You may need to have already registered on FT Alphaville for this link to work. Below are some graphs detailing the exponential gains posted in recent weeks. FT Alphaville - Bitcoin Story Bitcoin, Daily Above is the price of each Bitcoin on the main Mt.Gox exchange, which claims to handle 80% of transactions. Clicking on the image above will take you to the Mt.Gox webpage. This graph looks reminiscent of the moves seen in some of the technology stocks into the TMT highs through to the end of 1999. As Bitcoin has posted exponential gains over the past few weeks. Causing many articles in recent days to warn of a potential bubble. Bitcoin, 15 Minute Above is a 15 minute chart detailing how the online currency has posted a sizeable retracement in recent days. This  graph also describes how the trading in the new currency does appear to follow relatively standard charting formations. Elliott Wave followers would point out, for example, how the recent ABC correction has found support from Wave 2 of the previous 5th wave extension, unlike Wave 4 in more standard impulse waves. While other more traditional pattern followers would be keen to wait for the breakout on the current pennant formation. Using standard technical analysis rules this breakout is most likley going to be to the upside, due to the strong move into the pattern. Bitcoin, Level 2 This relatively simplistic Level II screen on this exchange is reminiscent of the Level II screens seen on UK equities over a decade ago, and before the widespread use of icerberg’s, hidden orders, tranches, algo’s etc. Recent articles in the financial press suggest that city traders have become increasingly interested in these new Bitcoin exchanges as the simplistic Level II trading is virgin territory for the more complex trading strategies that have been created over the past 10 years. There are a number of competing online Bitcoin exchanges seemingly opening up the opportunity of arbitrage. Bloomberg states that they have already received numerous requests to have Bitcoin live prices streaming on their service, and once this is implemented it is easy to imagine further trading opportunities rising, such as the possibility of spread betting on Bitcoin prices, options, currency pairs etc and increasing numbers of websites advertise that they are willing to accept Bitcoins as a method of payment. The market is young and growing, the regulatory, legal and tax implications remain unclear, but the underlying logic is intriguing and we do hope you find this brief introduction of interest. Contact Us For Spread Bet Sales:- 0044 (0) 207 894 8800 For CFD Sales/Traders:- 0044 (0) 207 894 8883 E-mail:- sales@cantorcapital.com Graphs Graph images are created on Bloomberg, and remain under copyright to Bloomberg. Depending on your email settings the images contained in this note may not be downloaded correctly on the first viewing. 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