Market Update 5 Jul 2013: Bitcoin Takes a Dive


After last week's monster surge higher, most asset classes took a breather and pulled back a bit this week. The exceptions were bitcoin, which suffered a stunning drop, gold stocks, which gave up almost all of last week's gains, and crude oil, which continued to power higher this week.

After losing 5.5% last week, Bitcoin dropped a further 27.8% to close at 1.82 g. Trading volume picked up significantly, averaging about 100 kg per day. This is a big price drop, no doubt, but keep in mind that BTC could fall all the way to 0.5 g without violating its long term exponential uptrend.

Bitcoin priced in gold

The government currencies were all weaker, led by the JPY which fell 3.9%. The USD was least weak, falling 1.7% to 25.6 mg, now 62.3% above its half-life curve. I continue to see this price action as a blow-off top, and urge you to take advantage of it if possible! See last week's market update for suggestions on how to invest now.

USD actual vs half-life prediction

Bonds were lower, with the short term SHY losing 1.7%, mirroring the USD, while the long term TLT fell 5.2% to close at 2.88 g, giving up about half of last week's gains.

Stocks were little changed from last week, with the Dow and S&P 500 off 0.2% and 0.1% respectively, while the Nikkei gained 0.6%. The exception was the HUI Gold Bugs Index, which finished the week at 5.5 g, down 7%, giving up almost all of last week's 7.4% gain.

Commodities were mixed, led by crude oil, once again the strongest asset class of the week, which gained 5.1% to close at 2.65 g/barrel. Silver was also higher, gaining 0.7% to 0.496 g/oz. The others were all lower, led by copper which lost 1.4% and platinum, which fell 1%.

Table of prices in gold for week ending 5-Jul-2013

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