Crossing Our Desk:- The price of bitcoin has been surprisingly...

Crossing Our Desk:

- The price of bitcoin has been surprisingly stable lately, no small feat for something so notoriously volatile. Since falling under $500 in the immediate aftermath of Mt. Gox’s late-February collapse, bitcoin prices have been sitting – alomst boringly – in a fairly tight band between $600 and about $635. So our doge ears snapped up when we noticed the price drop under $600 this morning.

Figuring out exactly why bitcoin prices are rising or falling isn’t so easy. If you want to find a 50-day or 200-day moving average, you can do that, but there isn’t a deep well of technical analysis out there. You can trawl through reddit, but (and no offense, redditers) you’re as likely to get a wild conspiracy theory as a fundamental reason.

Being proper market reporters, we did what we always do when we see an asset’s price rise or fall: we called an analyst, in this case, Gil Luria, a managing director at Wedbush Securities. He didn’t put too much into today’s drop. The move isn’t about any specific news, he said; basically, it’s just about more sellers than buyers (an old Wall Street saw). “There’s going to be these kinds of movements based on supply and demand.”

Part of the volatility is simply the market trying to figure out exactly what a bitcoin should be worth, and that’s not going to be perfectly clear until it’s clear what exactly bitcoin’s going to be. “We view the recent price volatility in bitcoin prices a result of extended price discovery,” Mr. Luria wrote in a report.

But he noted that the price has been relatively calm lately, and that calm has “helped people get over their bitcoin phobia,” he said. People aren’t investing in just the coin itself, they’re investing in bitcoin businesses, and price stability gives them more confidence. This trend, investments in bitcoin-related businesses rather than just the currency, is a key development, Mr. Luria thinks.

Wedbush, you may recall, began selling its bitcoin-related research on its website, and accepting bitcoin for payment. The experiment has been “surprisingly good,” Mr. Luria said. They’ve sold a few dozen reports, and shown the community that they’re “not scared” of bitcoin, that they’re involved in it, and they’ve even been contacted by regulators. “It accomplished our goal.” (Paul Vigna)