Bitcoin
has recently suffered what may be termed a “silent crash” after a stellar
performance in late 2013.
After
a blow-out performance in November, the Bitcoin price suffered a sharp pullback
in December and spent most of January in a temporary holding pattern above the
900 level before finally sinking under the weight of selling pressure in
February. As of Feb. 14, the Bitcoin
price was testing its dominant longer-term 40-week moving average, which
answers to the widely followed 200-day MA.
This marks the first major test of a significant trend line for Bitcoin
since last July.
The
sell-off in the last two weeks has occurred under a veil of near silence among
the mainstream media. The same financial
press which so vigorously praised the virtual currency’s prospects earlier this
year has largely ignored the slide in value since Feb. 6. This can be largely attributed to the recent
equity market sell-off, which stole the spotlight from other investment
vehicles.
It’s
nevertheless unusual that the media continue refusing coverage of the loss of
Bitcoin’s value. This leads us to
speculate as to a possible motive. One
possibility is that the hedge funds which recently entered the Bitcoin market
are using the decline as cover for accumulating a large stake in the
market. It’s no secret, after all, that
many members of the financial press are in the employ (if not the outright
ownership) of hedge fund moguls. It’s
therefore possible that the media silence on Bitcoin’s recent crash is bought
and paid for by those who intend to ultimately profit from it.
Of
course another reason for the lack of media interest in Bitcoin’s latest swoon
is perhaps that the virtual currency has been temporarily overshadowed by the
rally of the gold price. Gold’s rally is
a testament to its demand as a safe haven among investors spooked by the recent
financial market turbulence, as well as the media hype regarding an emerging
markets “crisis.”
Until
the media begins talking up Bitcoin’s crash in histrionic tones, investors
should be wary of assuming the slide in the currency’s value has
terminated. The Bitcoin bear market is
likely to persist until we see gloom-and-doom headlines announcing the currency’s
demise, at which time we can justly assume a psychological turning point will
be made.
