Life has been busy 9/2/15
Ah, no motivation or interest in Bitcoin anymore.

Sunday, January 4, 2015

Bitstamp Warns Users Not To Deposit Bitcoins until Further Notice

Bitstamp's Transaction Processing Servers Facing Problems

19,000 BTC was Stolen from Compromised Hot Wallet Servers

Update January 5, 2015 11:33 PM PST - Another official statement was released stating that less than 19,000 BTC was in fact stolen. Since that is merely a drop of water to them this will not affect most who made deposits before the times listed. Anyone else may have donated their Bitcoin to this mysterious hacker.

As to where these Bitcoins are going it looks like they are headed to a single address that holds about 18,867 BTC. All of the big transactions the day of January 4th so it follows the time line of when Bitstamp's hot wallet servers were compromised.

Now, will Bitstamp somehow have to buy back all of their lost funds? Likely since they will want to keep their solvency and not do what Mt. Gox did and try to hide it. It will not be an open market buy on any exchange as it would have too much effect to push the market up. Not enough liquidity for that much Bitcoin anyways without push the price up into the heavens.

For now, Bitstamp remains closed. No dates given as to when they will come back online. Security experts will be looking over what caused it. Quite a few are saying it was random number generator (RNG) attack whereby the addresses being generated weren't so random. The hacker could then easily generate private keys based upon the pattern. All speculative until official word comes out.

Bitstamp Suspends Services, Hot Wallets Believed to be Compromised

Update January 5, 2015 8:16 AM PST - Bitstamp appears to have suspended services for temporary maintenance. It is now believed that one of the hot wallets were compromised. The cold storage appears to be alright, and there had not been any big movements from any of those wallets so it is safe to say Bitstamp has more than enough to cover any losses plus commissions can really soak up whatever else was lost. This will affect Bitstamp's bottom line but should not affect users Bitcoins that they hold there.

The funny thing about this whole mess is that I had tweeted about distributing the risk between Bitstamp and Bitfinex 18 days ago. Now, something like this happens and it should really make users think twice before putting all their eggs in one basket. Investing wise and Bitcoin exchange wise. Mitigate the risk as much as possible by either A) using your own wallets and sending Bitcoin as needed to exchanges for trading then back out again, or B) doing like I did and spreading the risk thinner over two exchanges. I really did not have anything in Bitstamp right now so I am all good on that front.

Bitstamp also mentions that deposits made before January 5, 2015 1:00 AM PST will be fully covered by their reserves, and any deposits made after that same time may still be honored. So, for now we know that their has been a possible breach into the Bitstamp's hot wallet servers with possible losses of those funds. Users remain largely unaffected by all of this unless the kept making deposits after the 1:00 AM PST time. 

One thing that is certain is that any whales who did some trading on there are now out of the game for the time being. Good or bad? Only time will tell. Just because an exchange does not do well does not mean Bitcoin itself will start tanking. Bitstamp is merely a company providing Bitcoin traders easy access to buy and sell Bitcoins.

Bitstamp Warning Hot Wallet Server Issues
Bitstamp Warning Traders Not To Deposit To Old Addresses

Right now it seems that Bitstamp is having issues with their hot wallet servers. They are urging people not to deposit Bitcoins to previously generated addresses. In an email sent out to all it states:

"Dear customer,
Today our transaction processing server detected problems with our hot wallet and stopped processing withdrawals.
You should STOP SENDING bitcoin deposits to your Bitstamp account IMMEDIATELY as private keys of your deposit address may be lost.
Your bitcoins already deposited with us are stored in a cold wallet and [cannot] be affected.
We will send you more info as soon as possible.
Best regards,
Bitstamp team"

Update on Email Headers
It seems that the headers of the emails were deleted.
For the full headers of the email in its entirety Reddit user Krellis has posted them. Check out the full Bitstamp email here.


Whether or not this means that your deposited Bitcoins on Bitstamp are safe it seems that only hot wallets are affected by this. As Bitstamp holds majority of the other funds in cold storage it is likely that all of your Bitcoins are safe. Waiting for Bitstamp to confirm this with any new information they provide.

The Mt. Gox fiasco is all too fresh in our memories still happening over a year ago. In that case it was problems withdrawing not depositing Bitcoins. Bitstamp is most definitely working quickly to resolve these issues. If more information comes in I will try to update this unless of course I am asleep. For now, it does not appear like hackers have breached the hot wallet servers are that Bitstamp is doing a "Goxing."

Saturday, January 3, 2015

The End of Bitcoin or a New Beginning?

Bitcoin falls below 300 for the first time in 3 months

Photo by Tambako The Jaguar via Flickr CC BY-ND 2.0

Just get me to the TA!


Bitcoin continues to fall lower and there seems to be no logical explanation behind it. The last time it had been below 300 was in October. The one big news piece that has come out recently is that California has officially approved Bitcoin for transactions. Surely this news would not send us deeper into the cave of despair. So, what exactly is causing this? For now it just seems like irrationality of the market is kicking in and people may think Bitcoin is done for since it has not catapulted into the heavens as has been the cases for years past. We are charting into unknown territory at this point. For years we had predictable months of stability followed by rapid bullish greed which would then come toppling down. Now, we are so stuck in a bear dominant trend that many cannot see the light anymore. It is so invisible that it looks like a faraway star. Trust me, there is a light at the end of the tunnel. Bitcoin has had its ups and downs. Right now it is looking to settle down with a handsome fellow and start a family. Nothing to worry about if cycles start taking anywhere from 2-3 years. It just means that Bitcoin has grown up.


In other news, it seems like Bitcoin is getting so bearish news about how it is the worst performing currency. Do what you want with that news, but for me it is a possible sign that things may turn around. However, do not get your hopes up that seeing pessimism like this means we are in the clear. For one, we need to start seeing actual reversal signs on the charts in order to get more positive outlooks for where BTC will go next. For now, it seems that we are still in a midterm bear trend and unlikely to break out of it unless something changes.


Another article entitled Is Bitcoin Poised For Success In 2015?
seems to say that "Unstable prices -- and the public's hesitance to get on board -- have many expecting Bitcoin to fade away in the coming year. But enthusiasts disagree." I would have to agree that many do expect Bitcoin to fade away as it has been nothing but going mostly down for an entire year. Sentiment has been rather bearish, but there are still those in the Bitcoin community who would say they still have faith in BTC.


Is Bitcoin falling because people are losing interest or because the U.S dollar is gaining strength?


Reading through the comments on Reddit one really stood out for talking about how the U.S. dollar has been gaining strength. This has been something I have thought about once before and seeing that comment it would make sense that there is a correlation of dollar to Bitcoin. The US market for Bitcoin is quite strong. So, if the USD rises against Bitcoin people will not see holding Bitcoin as a necessity to hedge against what once was a weakening dollar. A little over a year ago we had the fiscal cliff and the U.S. government shutting down to worry about. Now, interest rates seem to be hawkish and people are once again putting their faith back into the U.S. dollar. Goes to show how many speculators really are in Bitcoin.

At a Glance or In Summary

  • California approves Bitcoin for transactional use
  • Some bearish news is coming out, but not a sign of reversal
  • Sentiment overall seems to be leaning more towards bearish
  • Recent downturn may be due thanks in part to the U.S. dollar gaining strength.

    My Thoughts: Continue to see more moves down unless reversal signs are seen.

Technical Analysis


As mentioned previously, we have reached down below 300 for the first time in 3 months. This is not looking so good for the bull of the market. The bears all but own this trend right now. It seems like the whole long term trend is about to go bearish if we cannot turn it around. Maybe we should let it since it is quite a struggle to work against those who see the USD as a more lucrative investment than Bitcoin. I could not blame them since it has been nothing but a short flight down into LAX so far. I wish I could say all things look good for Bitcoin, in terms of going to the moon, but I can't. We have continued to push down even amidst some good news. A clear sign that bears do not care and want us to head down further.


I have included an old but a good Fibonacci retracement line. The low from last time was around 275 and going lower would make this forecast nothing but storm clouds ahead. We can only handle so much before people start to bail ship and go into other investments.




  • RSI – Looking rather bleak right now. Fallen below the 30 mark which tells me we are facing some tough bears right now. The past three times it has been going below 30 and never above 70. This shows me that the midterm trend is bearish dominant. No signs of reversals in this indicator.
  • Stoch and StochRSI – In the oversold area at the moment, but not out of it yet. I would expect that sometime in the next few days the market to cool off again and things get much slower based upon this indicator.
  • PSAR – As we head down it is showing great strength on the sell side. When the parabolic starts to flatten out it will give a buy signal that will not be strong at first but will gain some momentum.
  • DC – The channels are a bit hard to see this zoomed out, but zooming it in on the interactive chart shows how we are in the bottom half of the line. If we can bounce up above the median, then that would mean some very short term bulls are trying to take back the short term trend. How long it will last is still yet to be determined.


For the targets I still see on other long term charts (i.e. Day chart) that there is a lot more room to push down. Shorter term charts (4 hour) point towards some slowing down for a short break before the strength of the long term chart pushes it further down. We may be seeing 250s soon so brace for that.


Short Term Targets


Bull Target:
$313 (More bearish, but a return back up could lead us here if but for a moment)

Bear: 269 (Hard to tell from old support lines; it may come back from the dead)
Charging Bull: 324
Stalking Bear: 274.8 (Because, you know, we like to test old supports)



Bitcoin TA 1-3-15 Chart
Bitcoin January 3, 2015 Technical Analysis

This chart is on Tradingview