Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
If You Don’t Understand Bonds, You Don’t Understand Investing - 25th Aug 19
Gold's Next Move - 25th Aug 19
Fresh Water Crisis Unfolding - 25th Aug 19
Newbie Guide to Currency Pairs in Forex Trading – Review - 25th Aug 19
When A 16-Year-Old Earns $3 Million, You Know It's Not A 'Silly Fad' - 24th Aug 19
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Save MtGox - Bitcoin Important Implications of Going Down

Commodities / Bitcoin Apr 19, 2014 - 05:29 AM GMT

By: Mike_McAra

Commodities

Cutting right to the chase: short positions might be the way to go now (stop-loss at $550).

A group of investors has come up with an initiative to convince the Tokyo Distric Court to not liquidate Mt. Gox's assets but instead give a go-ahead to the plan to rehabilitate the failed exchange. A website Save Gox has been set up and the plan has been outlined on it. We can read:


Under our proposal, MtGox's remaining assets would be distributed to customers immediately. Creditors would be made whole over time by sharing revenue generated from business operations and from other recovery programs, such as participating in the upside if they continue doing business with the rebuilt exchange.

We are prepared to invest heavily in this business once we have conducted a full accounting of MtGox's assets and legal liabilities. When MtGox was hacked, customer balances potentially were altered, resulting in the deficits that forced the exchange to shut down. Until a qualified audit has been undertaken by a suitable internationally recognized auditor, the size of those liabilities will remain unknown.

Our group would like to begin this due diligence immediately. Only then will we know the extent of the risks and the capital required to rebuild the business.

Once the valuation is completed, our goals are to:

1. Remove the information vacuum by disclosing in a timely fashion what happened to the missing bitcoins, the true status of MtGox assets and by providing creditors with audited statements of their balances.

2. Relaunch MtGox with a rebuilt and secure platform that will incorporate security, compliance, treasury and risk functions not previously in place.

3. Administer the recovery fund to repay customers who lost money, with ongoing monitoring by a public auditor.

This is only a plan but it points out that the liquidation of assets of Mt. Gox might not be the best idea. It is unclear how much worth of bitcoins actually is in Mt. Gox's accounts. At one point in time we thought there were none but afterwards, the exchange pulled 200,000 coins out of an old wallet. A complete audit of the exchanges assets and liabilities is a must now.

A plan to rehabilitate the exchange would possibly allow its customers to participate in any kind of future revenues the restored entity would be able to generate. This would definitely be better for the creditors than getting only a part of what they are owed.

As much as we would like to see the creditors' claims satisfied, there also are a couple of hurdles along the way. First of all, the audit might not be just as easy as it looks on paper. Also, there is the investigation into what actually happened with the missing coins. Any rehabilitation could run into problems since both procedures can take a long time to complete.

Then again, even the liquidation procedure would require an audit of the exchanges accounts, so the difference between the two scenarios, liquidation and rehabilitation, might boil down to the time necessary for the new entity to generate cash flow.

Considering the pros and cons, it seems that if the exchange can be rehabilitated, this would probably be the option allowing creditors to "squeeze the most juice" out of their claims. In any case, they won't see any of their money soon.

Now, let's take a look at the charts.

BitstampUSD Chart

Bitcoin moved lower yesterday on BitStamp but the currency closed marginally above $500 (dashed red line on the chart). The short-term outlook was bearish but not confirmed by a close below $500 or an increase in volume - the trading yesterday was significant but weaker than on the day before. Consequently, short positions didn't seem warranted.

Today, we've seen a move down, 4.1% so far (this is written after 11:15 a.m. EDT). We've seen weakness but not strong volume. Yesterday, in our Bitcoin commentary, we wrote:

We haven't seen a particularly strong (in terms of volume) move down yet and the price is still at $500, so the outlook is not decidedly bearish at this time. If we see a move below $500 today, the short-term situation will become bearish and we might go short.

It seems as though Bitcoin is going to stay below $500 today. If this is the case, one might want to go short in our opinion.

Bitcoin Chart

BTC-e saw more depreciation than BitStamp yesterday, precisely speaking the exchange rate went down 7.8%. The volume was significant but falling. Importantly, Bitcoin managed to close below $500 (dashed red line on the chart). The short-term outlook was bearish.

Today, we've seen more selling but the overall volume of transactions has been lower than yesterday. The one thing that might be bothering is the fact that we haven't seen a confirmation of a move down in volume - today's levels are lower than yesterday's. On the other hand, ot seems like Bitcoin is done correcting for now and a move lower might be continued, if not immediately than in the nearest future.

Taking into account the whole picture, we are of the opinion that short positions might become profitable in the nearest future.

Summing up, in our opinion short positions might be justified at this time.

Trading position (short-term, our opinion): short, stop-loss at $550. We're betting on a move down to follow, if not right away, than in the near future.

Regards,

Mike McAra
Bitcoin Trading Strategist
Bitcoin Trading Alerts at SunshineProfits.com

Disclaimer

All essays, research and information found above represent analyses and opinions of Mike McAra and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Mike McAra and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. McAra is not a Registered Securities Advisor. By reading Mike McAra’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Mike McAra, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules