Bitcoin Trading Alert originally published on December 19, 2014, 11:54 AM.
We read an interesting piece on Tech Crunch on how 2014 was difficult for Bitcoin. Overall creation of bitcoin wallets is up, which is an indication of continued interest from potential buyers. Wallets are files that contain private keys used to unlock the bitcoins within the tool so that you can spend them. It’s akin to a physical wallet that holds credit cards.
The number of wallets in existence at the end of the third quarter grew to 6.5 million from 1.3 million a year earlier. But according to figures obtained by Reuters, most of those wallets are empty. It’s estimated that only 250,000 to 500,000 wallets actually contain bitcoins. That implies that many people are opening a wallet, but failing to actually buy any of the stuff; the process is losing its complexity as consumer-friendly tools spring up, but remains harder than picking up normal cash.
In addition, investors and the media are noticing that bitcoin was among the absolute worst investments this year, measured on a percentage-loss basis. That fact won’t deter true bitcoin believers. However, it’s worth noting the increasing chatter among the bitcoin classes that the underlying technology of the currency—the blockchain—is what matters, and not the price.
This touches upon at least two important points which we mentioned in the past. The first one is the need for more user friendly solutions in the Bitcoin market, which could actually help in expanding the active user base.
The second is what we wrote only yesterday – that the media outlets are starting to write more stories on what a terrible investment Bitcoin is. This would suggest that there is more skepticism among market observers and participants. This could mean that we are actually close to a bottom, if not a long-term than a medium-term one.
With that in mind, we focus on the charts.