It's lunchtime Saturday in Europe. While the victims of Paris attacks are in our thoughts, the bitcoin market never sleeps.

However, judging by the price action so far, it may as well be asleep. It's trader hell with a choppy pattern that can't seem to find a direction. Good for some scalping of little profits, but overall better to just stay out of it.

Often times we can see big moves come on the weekend, so one should still keep in mind the potential for some unexpected action. If anything, the risk is to the downside, judging by the futures basis and the trend since we hit $500. We'll see.

Until next time.

The spot and futures markets are indicating bearish sentiment in the market.
As indicated in the graph above, the CNY premium to USD implied by OKCoin price relative to BitFinex, is now flat, after reaching highs of 15%.
In the futures markets, OKCoin weeklies are at a discount to the Index, and quarterlies have only a $2 premium. This backwardization in the market is reflecting not just excessive sell pressure by traders, but also a hanging margin call at $340 of 18,000 contracts, which will run a socialised loss because the insurance fund was depleted in the settlement today.

I found this particularly interesting. During the whole bull-run up in Bitcoin late October/early November, the CNY exchanges had a large premium to USD exchanges.

See the graph here showing the relative price of OKCoin CNY to BitFinex (USD):

Note how as the price has fallen from the $500 peak, the premium on CNY exchanges has fallen. If ever there was any doubt that the Chinese drove the bull-run and have now been responsible for deflating it, this should clear it up!

The question now is, with the premium down to flat/discount, are we priming for a new push upward, or is it a sign of a bear market for the coming future?

We'll see. Remember if you want to trade futures, check out List of Futures Exchanges or trade margin at Spot Exchanges. You can also trade Bitcoin on CFD sites that do not have any orderbook.

What an ugly week. Price has fallen almost $200 now after touching $500.

It's price volatility like this which highlights the usefulness of Futures and Forwards to hedge the fiat value of coins you own or are expecting to come in.

Go to our Futures Exchanges list to see what options there are for allowing you to sell Futures contracts to earn money when the price declines, compensating you for the lower exchange rate.

A guide will be forthcoming on how to use each of these services.