Bitcoin Auction Leads to Crypto Selloff
The US Marshall Service announced yesterday that they will be auctioning off 50,000 bitcoins seized from Ross Ulbricht, who is accused of being Dread Pirate Roberts, the mastermind behind Silk Road 1. The news immediately led to a 4.6 percent drop in BTC prices and altcoins followed suit. Peercoin broke free of the $0.80 barrier and Litecoin fell 3 percent to a daily low of $3.77 per coin.
Bitcoin Auction Puts a Dent in the Rally
Since our last update, BTC/USD has been in retracement mode. Prices first fell to a low of $365.15 on Saturday, only to rally to $405.94 in the next two days. But the announced bitcoin auction stopped bitcoin’s renewed attack on $400. Few minutes after the news hit the wires, BTC started a slow but steady slide down and eventually hit a low of $373.03 yesterday.
We are currently quoted at right at the $380 mark. There is some weak support in the $374-$380 area, as evidenced by the fact that yesterday’s fall was halted at $373. Another weak support level can be found at Saturday’s swing low at $365. But the real test for the rally will be at the $345-$350 support area. A move below here will likely spell an end to the fledgling move up.
On the upside, the $400-$408 area is important resistance for BTC. But while a move above $408 may lead to some gains, bitcoin will need to break $454 per coin to bring new life into the stalled rally.
Peercoin Nearing $0.73 Again
Alternative cryptocurrency Peercoin is again getting close to the $0.73 mark. This level is important because it has been tested on three previous occasions. On October 5th PPC/USD hit a low of $0.736 before rebounding to $1.20. Then on both November 3rd and November 4th prices hit a daily low of $0.73 and on November 7th PPC hit a low of $0.735.
With each new test of $0.73, a break lower becomes more likely. But how much will Peercoin lose on a move lower is up for debate. The altcoin has closely followed big brother bitcoin higher/lower and a rally in BTC prices may ruin the bears’ plans. Some of the possible targets/support levels on the downside include the September 9th swing low at $0.675, followed by the Peercoin yearly low at $0.565 per coin. A move below $0.565 may lead to prolonged losses for PPC although I suspect that the round $0.50 mark may also provide some support to falling prices.
On the upside, we have a resistance area at $.80-$0.823, followed by $0.90 per coin. You can see the rest of the levels of the chart above. But to repeat again, with PPC shadowing bitcoin’s moves, it’s important to be aware that sudden price shocks to the upside are possible.