Bitcoin Makes Partial Recovery After TaoBao Triggered Selloff

After a sharp sell-off in trading on Tuesday, BTC made a partial recovery Wednesday morning. After hitting a low of 860 USD on MtGox, it quickly recovered to 930 USD and has held steady in the 900-920 USD range thus far.

It remains to be seen if BTC will make a full recovery to the level of 1000 and beyond seen on Tuesday.

The previous sell-off was spurred by the ban of Bitcoin by China's largest e-Commerce site, Taobao. As the initial shock of the ban wore off, speculators continue to restore their faith in the currency. A possible bullish indicator for prices was that demand rose during the period that Chinese traders are most active, indicating that they weren't too concerned with the Taobao news. This contrasts their sentiment after BTC China halted CNY deposits last month.

The cryptocurrency has not been able to advance beyond 940 USD thus far today. If it does break this point, expect it to gradually recover toward the 1000 level seen yesterday in the absence of other deleterious news items.

Update: BTC has since broken through 940 USD and just hit 960 USD as news from BTC China is raising demand today.

(Chart source Bitcoincharts)