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Bitcoin Stages a Monday Morning Breakout Above $100 on Higher Volume*

July 29, 2013 at 19:35 by BitcoinNews

According to the prices at Mt. Gox, the price of Bitcoin finally broke above $100 this morning between 6 and 9 a.m. Eastern time in the U.S. The volume reached a high of 5,429 Bitcoin traded in the 8 a.m. hour during the breakout– that was a somewhat elevated level although 18,897 were traded at 14:00 on Sunday**– and it eventually reached a high of $102.85 in the next hours before pulling back the rest of the day to $100.65.

However, the price differential between exchanges is now even higher than during the April 2013 bubble, according to the analysis of Jonathan Stacke at the Genesis Block. The differential reached a 16-month high this week, which was surpassed most recently in March 2012 when Bitcoin traded for $4.50. This represents a shift in regime, since prior to May 1, Bitcoin trading volume and the price differential across exchanges were more highly correlated with one another.

With continuing tight bid/ask spreads,  the higher price would imply that Bitcoin at Mt. Gox right now are actually considered to be more valuable than BTC elsewhere, which makes no sense, unless it is price-shading, i.e. a hidden fee to a buy-heavy market. There has also been some speculation that Mt. Gox customers might be bidding extra simply to get BTC in order to transfer their account funds more easily, but that argument wouldn’t hold if the withdrawals have indeed been re-instated. This is something to look into further as the price differential continues.

Stacke speculates that the micro events surrounded the recently dissipating withdrawal concerns at Mt. Gox might have had an outsized influence on the widening of the price differential since May. Due to that concern, and the fact that Mt. Gox’s prices are now so consistently higher than they are at other exchanges, he highlights the fact that two new venture capital-backed exchanges are slated to open this year.

Nonetheless, a number of existing alternatives to Mt. Gox have continued to gain market share. He cites Bitstamp and BTC-E as having lower rates for Bitcoin currently. However, Coinbase, a California-based company, is also an attractive alternative for customers who are looking an easy method to buy Bitcoin without requiring many extra day-trading tools and indicators.

Another exchange, albeit a small one, has suspended operations as the Bank of Thailand advised that buying or selling Bitcoin, or sending it or receiving from abroad, were not permissible under current laws.

*Due to the price differential highlighted in the article, it should be further noted that the Bitcoin breakout above $100 occurred at the Mt. Gox exchange alone, as other exchanges still appear to have lower rates on offer in the low to mid 90’s.

**Correction: On the one-month chart, this spike in volume in not apparent, so it may have been erroneous data.

2 Responses to “Bitcoin Stages a Monday Morning Breakout Above $100 on Higher Volume*”

  1. Abdussamad

    Mt. Gox’s withdrawal problems are far from over. You can’t get your money out of Mt. Gox as fiat so you have to buy bitcoins. See the service discussion section of bitcoin talk forums:

    https://bitcointalk.org/index.php?board=85.0

    [Reply]

    Michael Ivers Reply:

    Thanks, I will take a look at this link. This price differential has been quite the conundrum.

    [Reply]

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