Bitcoin breaks $5K barrier

Bitcoin soared through the $5,000 psychological barrier with a $200, 20-minute spike earlier this morning.

The cryptocurrency found support as Asian markets were closing and Europe was about to open. Continue reading


The mysterious bitcoin crash

This is the type of overnight trading sessions that give bitcoin traders fits.

Roughly 4 hours ago the cryptocurrency had a flash crash of epic scale and the reason behind the cratering is not very apparent just yet. Continue reading

$10,000 bitcoin can’t happen with these exchange outages

While bitcoin was dropping like a stone on Monday with sellers clamoring for the exit, thereby crashing the Coinbase exchange, another digital crypto-like token, ethereum, soared to record highs.

Other exchanges like BTC-e, tweeted on Monday that it was hit by a distributed denial-of-service attack, or DDoS. Their website was back online at 4:00pm EST.

This was the second outage for Coinbase in the last three weeks and both outages were when bitcoin was falling.

So what is with the bitcoin exchanges, that they work fine when there are $200-$500 run ups in price, but fail miserably on the downside? And why can’t they get their stories straight?

For any cryptocurrency to gain broader appeal safeguards must be put in place to give each investor equal opportunity to buy and sell. The last thing anyone needs is a government to step in to regulate the market.

Another question is how is it that a digital currency exchange is developed that is not robust enough to handle spikes in traffic? The exchanges are built with the express purpose of having scalability. It’s not like you built a physical market and then people started trading it online and you were caught short.

The exchanges by using the ploy of server outages due to traffic or DDoS attack at a critical junction are setting themselves up for comparison with Mt. Gox and its implosion some years ago.

If you want to see a $10,000 bitcoin price, these exchanges — and there are about 10 of differing sizes on bitcoin — must come together to execute sales for each other if one exchange goes down.

You can’t expect neophytes, new to the cryptocurrency markets, to be able to manage navigating different exchanges to find one to buy or sell on.

The Federal Reserve is schedule to announce Wednesday the result of its two-day meeting on whether to raise rates another quarter point.

I’ve written numerous times that Yellen & Co. will not raise again this year.

So I’ll stand by that and say the Fed will stand pat and wish to monitor the markets and inflation and stand ready to raise at upcoming meetings, but will stand pat today.

While the low rates have created numerous asset bubbles from stocks to bitcoin, the tightening of credit will have a disastrous effect on the overall economy. GDP is looking at below 2% for the quarter after coming off a sub 1% first quarter.

That’s my call we will see at around 2PM EDT whether I am right or not.

Bitcoin falls $500, but Coinbase cratered worse

Well right after I posted yesterday that bitcoin had broken through the $3,000 mark all hell broke loose.

The digital currency lost $350 in an 18-minute span and an hour later would fall another $150 before finding a floor at $2,530 or so.

This is why I caution “investors” in the currency. You need to be able to stomach the market gyrations on the up side as well as the down side. If you enjoy roller coaster rides, then this may be the investment instrument for you.

A I write bitcoin sits at $2,743, up 3% for the past 12 hours.

The more troubling aspect of yesterday’s drama was the performance of Coinbase, one of the largest digital currency exchanges.

Coinbase tweet

The platform was “down” for a good part of the day, while prices were cratering. Above is the tweet the company put up yesterday at 2PM EDT.

“Investors” could not log on to their accounts and pricing information was spotty at best with no ability to trade. This needs to be rectified immediately if the cryptocurrencies are going to have broader appeal. You can’t haveĀ  a major exchange go down when traffic spikes.

This is the second time in a month Coinbase has suffered an outage due to high trading volume. This lack of quality control leads me to believe that the exchange did not want to suffer a liquidity squeeze as sellers were trying to get out of the market.

If that is the case, this could be the first sign of trouble in the cryptocurrencies.