Bitcoin Drops; New Scaling Proposal Emerges

We’re right at the middle of the week with the price of Bitcoin very close to what it was two days ago. Like we talked about in our last update, the price grew out of the $1,140 range thanks to a steady buying trend. However, since early morning a bearish wave started showing on our market charts and Bitcoin’s value consequently followed suit. For now, there’s little sign of any major drop, but the market can always change fast.

In other Bitcoin news, net-entrepreneur Kim Dotcom who is on the U.S. wanted list for extradition for his now-closed file-sharing platform MegaUpload, has announced a new paid content service that will work on Bitcoin on his YouTube channel. The service will be aptly named Bitcontent and it will allow users to upload any type of content online, share it, and receive payments in Bitcoin.

Currently, there’s no official launch date or any other details as to how the service will differ from similar services. The launch is also overshadowed by his pending extradition, which the New Zealand court ruled on in February – a decision he is now appealing.

Market Turns Bearish

During the past 48 hours since our last update, the ascending trend that began two days ago was put to a halt, while the price started dropping down due to increased selling pressure. The highest point was hit yesterday afternoon, when the price peaked at $1157.80 only to reach its lowest point of $1,122.89 several hours later.

The high volumes we saw two days ago are now subdued, although not entirely, as the current figures show it to be at $374,248,000, while the market cap is at $18.3 billion. It seems that the 300million range is becoming a new “normal” for Bitcoin.

Our technical analysis shows that the overall signal on the daily graphs is still pro-buy, while shorter time-charts show an increasing buying pressure. 1-hour charts have 8 out of 12 oscillators and 8 out of 12 moving averages sending a selling signal, which makes the current mood heavily in favor of selling.

However, both long-term and short-term charts show the SMA 100 is over the SMA 200, showing less resistance to the upside, so don’t start counting your losses just yet. Currently, sellers are putting the price to a test, which could lead to more losses if it takes the price below $1,110. That is, if buyers don’t take over in the upcoming hours.

Extension Block Proposal Gains Support

During the past days, a new solution to the Bitcoin scaling debate was revealed called simply Extension Blocks.  The solution was proposed by Bitcoin startup Purse and has so far gained mixed reception, although some say it is likely the most logical way to end the Bitcoin blockchain scaling war.

So far, there have been fears of a hard fork and the SegWit proposal, which was a good solution, although not ideal. However, Extension Blocks aims to work with both sides of the debate to reach a solution that will work for everyone, by changing Bitcoin in a way that would both incorporate the SegWit idea but also avoid a hard fork.

In short, Extension Blocks will see additional blocks added to the blocks in the main blockchain as an extension (thus the name) that could process more transaction outside of the 1MB cap. This way, the Bitcoin network can be enhanced without damage to the main blockchain, and would thus allow developers to experiment more freely. But will the proposal gain support, remains to be seen in the upcoming weeks.

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