My Google-translated understanding of this is that BTCChina found a new voucher system to use to replace the Taobao system they had previously used. That’s bullish, but not incredible. Third-party processors can still work with Bitcoin until the 31st, so the existence of this plan is not inherently bullish. What is bullish about it is that it is very close to January 31st, and BTCChina convinced a company to work with them. This seems an odd move if they are just going to have to stop doing it next week–the only results would be very minimal reward and increased government scrutiny. The latter of those is something I would be very careful to avoid, if I were a Chinese company.
Past that, the article also mentions a prominent Chinese economist supporting Bitcoin, which I find interesting. I’m not up on Chinese society, but I assume that academics are tightly controlled by the government.
As a whole, the news is bullish, but cautiously so.
The more interesting topic of discussion is the apparent breakdown between price movement and news. We’ve had nothing but good news the past day or so, and I still believe that this Google news is incredibly bullish. People who criticize the Google “news” are certainly very correct to do so–it is basically meaningless. We knew Google was looking at Bitcoin. Of course they’re looking at Bitcoin. They’re Google. The news itself isn’t bullish. What’s bullish is the headline Forbes decided to use for the story: “Google Lets Slip That It’s Exploring Possible Bitcoin Integration Plans.” That’s a big deal. As always, perception becomes reality, and how news organizations depict a story is often just as important as the story itself. In this case, Forbes has created a lot of upside for Long positions. If this news spreads much, it will light a fire under the rocket.
That’s not to say the news will definitely spread. I woke up this morning anticipating the price to be between 820 and 840, or possibly higher. Instead, we’re hovering in the low 800s. That’s scary. I’m locked in to expecting notable upward movement for right now, though.
One of the hardest things to do as a day trader is set stop losses and stick to them. I’m setting mine here at the 775-780 range. If it drops that far, I’ll be too scared to want to hold my long position. One lesson we should all take to heart: don’t fight the market. If the market decides the news is worthless, then it is. At the same time, you have to be willing to risk money on your beliefs. I believe that the 31st is an illusory specter. I believe the news has been ultra-bullish the past few days, with major announcements and tons of positive op-eds. There have been roughly a billion articles from prominent sources predicting dramatic Bitcoin price increases. Here are a few:
Yahoo Finance article from today, predicting $1,300 and greatly reduced volatility.
Marc Andreessen, of Andreessen Horowitz, a notable Venture Capital firm, comparing Bitcoin to the advent of PCs and the Internet.
Wells Fargo held a private summit recently in San Francisco, and is now doing an open one in NYC.
As the specter of China slowly dematerializes, these stories and others like them will become more important. If China does end up doing something drastic to Bitcoin, well, that won’t be very fun for me, but I will survive. The odds of that happening don’t seem too high at this point, though. The only thing we can really do right now is wait. And HODL.