An interesting article - Why BTC price has gone down Sept 18

[crazyivan]

Take a look at this and comment if you like. It is always some kind of crap in China. Has the World really become so dependent on Chinese market conditions?

Why The Bitcoin Price Dropped Today
by GUEST AUTHOR on SEPTEMBER 18, 2014 0
The post was written by Ian Worrall of Sembro Development LLC

Normally in the Bitcoin world sudden price fluctuations ranging from $10-$30 can be attributed to market manipulation by large holders of the virtual currency. However, when the price changes greater than $30 in a short period of time there is typically something more behind it such as imposed government regulations or technical implications such as a mining pool nearing 51% of the total network hash rate.

Today, September 18, 2014, the price of Bitcoin is down 9.39% ($42.70) at the time of writing this article and has decreased by a whopping 17% this week (≈$70) with no clear indications as to why. Through our analysis we believe we have determined the reason. It has nothing to do with the Bitcoin industry but rather the upcoming IPO of Alibaba, the Chinese e-commerce giant, which is set to go public tomorrow, Friday the 19th, which would bring in a vast amount of support from Chinese investors from banks to individuals who have wanted to showcase that the Chinese market means business for quite some time, and this is their golden ticket to do so.

The Alibaba IPO has generated a lot of noise in the financial markets as the IPO date has drawn closer and tonight the leading Wall Street investment banks are holding a meeting to determine the official share pricing of Alibaba as it hits the markets tomorrow. Originally the price per share was said to be in the $60 range, but earlier this week Alibaba raised that estimate to $66-$68 per share. We believe that the Chinese Bitcoin holders began dumping their holdings earlier this week to free up capital to invest in Alibaba when it goes public.

The largest Bitcoin exchange by volume, BTC China, which covers an average of 38% of the total Bitcoin transactions has averaged around 19,000 Bitcoin per day in trades. Today, the volume is currently up over 52% at 29,400 Bitcoin and rising.

On top of increased volume on Chinese exchanges, the volume on the European exchange platform Bitstamp is up well over 100% today at around 21,400 Bitcoin compared to the monthly average of 9,200 Bitcoin. This is right after many of the leading German analysts from renowned investment banks have indicated that Alibaba is a strong buy.

Based on this information, we have concluded that many large Bitcoin investors from China and Europe have exited their positions in Bitcoin to put into the Alibaba IPO.

Are these investors gone for good? No, many factors will determine how long it is before these investors close their positions in Alibaba and re-enter the Bitcoin market. If the Wall Street banks issue an initial price lower than expected we could see the price rebound slightly as soon as tonight. After that, the key factors will include how the price fluctuates during the public offering tomorrow and Post-IPO early next week. If Alibaba remains strong and continues to grow in value, we may not see this money flow back into the Bitcoin market until a “bump” in the economy occurs.

The U.S. Federal Reserve has kept interest rates low as indicated in their public statement yesterday, but they intend to begin raising them as we head into 2015. If this scenario were to occur mid-2015 would be a definite point in time when the investment money flows back into Bitcoin, and at even greater volume due to the gains achieved by investing in Alibaba long-term.

Is it guaranteed that the money will flow back into Bitcoin? While nothing is ever set in stone, our research has shown a correlation between the price of Gold and Bitcoin price movements. This being said, Gold tends to rise, based on historical records, when the markets start to become unstable. So we do believe that a vast majority of the money invested in Alibaba and the gains associated will find its way back into Bitcoin.

[alwaysonhere]

I think it will sort itself out as usual.  My mining gear continues to run.

[frankenmint]

you simply copied and pasted that from the bitcoinmagazine's website, I found the link earlier.

[crazyivan]

you simply copied and pasted that from the bitcoinmagazine's website, I found the link earlier.

What? You thought I wrote this? Dude, the name of the author is clearly stated.

[Gleb Gamow]

So, some Chinese are opting to take a ~20% lost to covert to fiat so that they can in turn enter a regulated exchange to hopefully garner a 5%(?) profit via purchasing, then selling Alibaba.

Did I nail it, or should I take a 2x4 to my head?

[hua_hui]

Chinese investors like to participate the IPO. If they are lucky enough, one time, two times returns are easy. This is great opportunity for any individual trader. This is why they prefer to invest this type of IPO  no matter how much % loss from selling bitcoin holding.

[runam0k]

It's certainly possible.

The one saving grace about all things China (for anyone thinking long term, at least): their economy is destined to crash, hard.  People will want to get their money out.  Bitcoin will be their best option.

[cafucafucafu]

Can't be true. All the drops are coming from the Western markets. The Chinese exchanges are not inducing all these drop. Just look at the data. This is a Western decline.

[aigeezer]

Yes, it's an interesting article. My first thought is "what does Sembro want out of this" (I don't know).

From their homepage:

"When the price of bitcoin plummeted due to the Mt. Gox incident, we were worried that it may be nearing the end so we started developing mobile games and have several planned releases for Q3 of 2014.  We have also been developing some very detailed bitcoin software which is set to be released in early August 2014. As you can tell from our above mentioned journey, we are a very flexible and adaptable company that learns fast and spends the extra time necessary to produce quality products."

https://www.sembrodevelopment.com/

One still has to think for oneself. My head hurts.                     

[niothor]

Chinese investors like to participate the IPO. If they are lucky enough, one time, two times returns are easy. This is great opportunity for any individual trader. This is why they prefer to invest this type of IPO  no matter how much % loss from selling bitcoin holding.

http://www.ibtimes.com/alibaba-ipo-winners-losers-1690772

Chinese investors are very limited in the extent to which they can participate in the Alibaba IPO, due to restrictions imposed by the Chinese government on the purchase of foreign equities. Zhou Nushi, a retired factory worker in Shanghai told the Financial Post. “I’m a little confused about why you can’t invest in a Chinese company if you’re Chinese.” Institutional investors and the ultra-rich however, can take advantage of the IPO through alternate avenues. “For institutional investors, they have some ways to get around the government's currency controls. Some funds have already been prepared for the Alibaba IPO for a long time. “Even though those opportunities are available, they are only for the ultra-wealthy Chinese, not the ordinary Chinese investor,” said Professor Anthea Yan Zhang.

[chennan]

No matter the reasons, this price is really low now. If you have strong faith in bitcoin, you should grab this great opportunities and buy little bit.

[cbeast]

People are not selling bitcoins at a large percent loss to make a small percent gain in Alibaba.

[p2pbucks]

lol ... stupid article .
How many investors dump their bitcoins for alibaba IPO ?
 I haven't heard any of my friends did that 

[IIOII]

lol ... stupid article .
How many investors dump their bitcoins for alibaba IPO ?
 I haven't heard any of my friends did that  

Yes, not credible at all. Who invented the legend that all Chinese people with money desperately want to buy Alibaba?
If it is so, wouldn't we see a marked difference in market movement between Chinese and other exchanges?

It reality Bitcoin is a more favorable asset to own for Chinese people, because it is less subject to capital controls and can be moved easily without surveillance.

[OrientA]

That story is not credible.

[vipgelsi]

No one has a understanding why the price is what it is. If you did you would be a on yacht somewhere.

[rampage101]

I doubt there is a large enough percentage of Chinese investors falling into this category.  Most intelligent investors are not dumping one investment 100% to put it into another investment.  They would likely get free cash from somewhere else.

[Beliathon]

The one saving grace about all things China (for anyone thinking long term, at least): their economy is destined to crash, hard.  

This is true and a matter of when for every national fiat currency on Earth. No civilization in history has lasted forever.

[SirWilliam]

Too funny. Watch the action today between Alibaba open and BTC price, seems to confirm this hypothesis. Lol talk about the hot money 

[God Donut]

alibaba thing doesn't seem to be the case. I see dumps happen first on BTC-E and then Huobi follows the price drop. So its not chinese who's causing the price drop