Bitcoin Markets Hold Steady, But Brace for More Craig Wright Details
Bitcoin markets experienced little change on 2nd May in response to Craig Wright’s claim that he is the digital currency’s creator, Satoshi Nakamoto.
Bitcoin markets experienced little change on 2nd May, providing a mild response to Craig Wright’s claim that he is in fact the digital currency’s inventor.
The Economist, the BBC and GQ all released stories on the subject that day, following months of speculation surrounding whether Wright created bitcoin. After Wright's assertions, skeptical cries arose from many corners of the bitcoin community, including several experts who spoke with CoinDesk at the Consensus 2016 event.
Regardless of which experts support Wright’s claim, the market’s reaction has been largely uncertain. Bitcoin prices dropped slightly early on 2nd May, falling from a high of $452.60 at 07:00 UTC on 2nd May to a low of $439.89 by 09:00 UTC, according to CoinDesk USD Bitcoin Price Index (BPI) data.
For the remainder of the day, the digital currency fluctuated largely between $440 and 445, an extraordinarily tight range for the normally volatile bitcoin.
In addition to enjoying stable prices, bitcoin saw little change in long-short ratios in the BTC/USD market, Petar Zivkovski, director of operations at full-service bitcoin trading platform Whale Club, told CoinDesk.
"If anything, we've noticed an uptick in long positions as value traders see yesterday's panic dump from $450 to $440 as an opportunity to 'buy the dip.' Most traders are without a doubt betting on more upside," he said.
The currency’s price remained largely unchanged over the next few days.
Bitcoin prices opened at $444.51 on 3rd May and proceeded to reach a high of $450.89 at 18:00 UTC, lingering just north of $450 for the remainder of the session, BPI figures reveal.
The digital currency’s price dipped slightly in early trade on 4th May, falling to an inter-day low of $445.44 at 11:00 UTC and proceeding to fluctuate close to $445. At the time of reporting, bitcoin was trading at around $446.
These price movements took place as market participants made bullish bets on the digital currency. Whale Club’s long-short ratio stood at 5:1 in favor of longs at roughly 19:00 UTC, Zivkovski revealed.
"This buy pressure can resolve in one of two ways over the next few weeks," he told CoinDesk. "Either the support created is strong enough to buoy price toward a sustained uptrend above $470, or all these longs will serve as powerful fuel for a long squeeze (aggressive selling) should support break down."
While bitcoin has been enjoying relative price stability, this may not last for long.
Calm before the storm
Should Wright succeed in convincing the markets his claims are legitimate, this development could trigger volatility in the digital currency, said Zane Tackett, director of community and product development at Bitfinex.
In addition, many are wondering what will happen should Satoshi begin selling off his approximately 1,000,000 bitcoins. While the market has thus far been "undecided" in its reaction to Wright’s claims, any decision made by Satoshi to start divesting this horde of coins could have a major impact, stated George Samman, a blockchain advisor and consultant.
“People will be very nervous they will be dumped into the market as those coins remaining static has been a benchmark for a long time," he told CoinDesk. "They have long sat in the Tulip Trust and if they start to move, it would definitely shake the market and people would be watching."
Tim Enneking, chairman of Crypto Currency Fund, a digital currency-focused hedge fund, stated that Wright’s claims had “less of an impact” because several people have come forward in the past 18 months claiming to be bitcoin’s founder.
The far more important question, he said, is 'What is Satoshi going to do with all his coins?'
Charles L. Bovaird II is a financial writer and consultant with strong knowledge of securities markets and investing concepts.
Follow Charles Bovaird on Twitter here.
Trading image via Shutterstock
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