Originally published in the BullBear Analytics Weekly Report released on 12/3/2014. Partial excerpt only. Written by @AKWAnalytics.
As we all know by now, the USMS will be auctioning off another 50,000 bitcoins that were acqured by the US government in the Silk Road bust last year. While the initial announcement spooked the market momentarily, it seems that traders are taking a “wait and see” approach.
In our opinion, the growth in the maturity of the bitcoin market is impressive and is exemplified by the muted reaction leading up to what would seem to be a seminal event (auction). This apparent evolution is simply a process of coins moving from weaker hands into stronger hands (think gov’t -> private investors), and can explain much of the consolidative price action we have seen in the markets over the past year. We continue to believe that this is a healthy and necessary process for further sustainable growth, however it can be frustrating for those looking to generate quick alpha by trading coins.
Another, more general, comment we want to make is about asset allocation. In the traditional financial markets, it is common for underperforming assets, whether they be stocks, commodities, or bonds, to “play catch-up” the year following the weakness as investors rebalance their portfolios. Conversely, assets that performed well are looked to for profits to fuel newer, better opportunties. Combine this with an inevitable clarity in bitcoin regulation, and we still think 2015 will be a great year for bitcoin, both the currency and the technology.
Cheers,
@AKWAnalytics
BTC/USD daily chart
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