Microsoft added bitcoin as a payment option for funding Microsoft accounts on the 11th of December. This allows Microsoft users to purchase digital products from the Windows, Windows Mobile and — most notably — Xbox market places. The payments are being processed by BitPay.

This is obviously a very bullish announcement for bitcoin. However, as 2014 has clearly demonstrated, fundamentals and positive news do not necessarily lead to sustainable price rallies. This post will explore the considerations traders should make in-light of the Microsoft announcement.

Will this be a repeat of PayPal?

Bitcoin rallied very sharply from $339.80 to approximately $365 immediately after the Microsoft announcement, squeezing shorters along the way. After rallying, the price has seen some profit-taking but has held above $355 for the most part.