Bitcoin Forum

Not long ago, they were being sold for $35 a piece. Lately, I have seen them as low as $10 on MtGox.

Is anyone knowledgeable on the subject? What caused the huge downfall in value as of recently?

They where sky rocketing lately.
It looks like the market is normalizing.

Speculation. Most of Bitcoin value is speculation at the moment. Hopefully it'll normalize and be used as intended, instead of a get rich quick mindset that it seems to be in currently.

No it doesn't, Still fluctuating ~$8 in the past 48 hours (admittedly not as bad as the $20 swings it used to do)

I sure hope it normalizes soon. Sucks that lately every time I want to do a transaction, I have to check every 5 seconds to see what the price is at. I feel very sorry for all the exchange services, life must be hell for them lol.

Do you think the current status of Silk Road has caused the decline in BTC value? Perhaps users are dumping off all of their bitcoins at very low prices due to SR's current status, and everyone else is following the trend they caused?

There is also probably some fear based on this thread where someone allegedly had 25,000 bitcoins stolen.

http://forum.bitcoin.org/index.php?topic=16457.0

that is a sad sad story for him...

Short answer: Economics, people sold bitcoins thus the price dropped

For those interested in speculation and the risks involved check out the event known as Silver Thursday in 1980.

The Hunt brothers (very wealthy) had the idea to hoard as much of the silver on planet earth as possible. Basically they ended up owning 30/100 of silver on the market... of planet earth.

This drove silver prices through the roof. For the scheme to work people would have to invest in silver at those prices (believing it would continue to become more valuable / more scarce) so that the Hunt brothers could progressively sell off their silver at the inflated prices.

Everyone called them on their bullshit and the price of silver normalized. They pledged collateral in their various investments to back this gamble, they lost an estimated $4 billion when everything was said and done.

http://upload.wikimedia.org/wikipedia/commons/thumb/f/fe/Ag_annual_average_USD_price_1792-2005.svg/600px-Ag_annual_average_USD_price_1792-2005.svg.png

Mans disposition towards greed is neato.

This is precisely why I believe people thinking the intentional manipulation of BTC value is occurring are wrong. It would end up burning them in the end because they'd have to buy and sell at the wrong times.

Except that's not what happened with the Hunt bros.  Their attempt to corner the silver market was successful.  This made them rich and no one else.  That made a lot of people very angry.  So it was Ex Post Facto declared that what they did was a crime and their assets were seized by the government.  

That can't happen with BTC.  So speculate away.  If you got the resources maybe you can corner the BTC market.  However, it will be a lot easier for people to walk away from BTC than silver.  Speculators can loose their shirts.  That's why it's called speculating.

As for the recent boom and lesser bust.  I'm thinking it's mostly about the MSM reporting on the Silk Road TOR site (an open market for illegal drugs bought with BTCs)  

As far as what I could gather from IRC and talking to people, speculation and news drove the price to $30, and then Dwolla and MtGox had technical issues from some time early Wed morning until late Friday, which prevented people from transferring USD into MtGox, and effectively cut all buyers out of the market, leaving MtGox only with sellers. As sellers kept selling with no new buyers entering the market, the price kept declining. Even though Dwolla fixed their problem by Friday, many people (including myself) couldn't get their money into the market until Monday. Banks close on the weekends, so that inflow of cash was cut off, too. A combination of lack of buyers, and uninformed people panicking and selling/dumping, made the price crash.
Now that the money in the markets is flowing (more or less) freely again, the price picked back up to $20 or so, but due to the large crash, I suspect a lot of people are still nervous about investing in BTC. That, plus this week's almost daily DDoS attacks on MtGox have effectively slowed the market. MtGox's volume has been around 30,000 per day all week, when it was easily in the 70,000's to 100,000's a day during the run-up to the $30. This freeze of the market also gave people time to really narrow the market spread, so whereas the buy and sell used to consist of small orders spread out between $15 and $30, now most of the orders seem to be concentrated between $18 and $20. So, unless there's a lot of buy pressure and sellers notice it in time to move their asking prices (and I AM noticing buy pressure), increase/fluctuation in BTC should remain low or increase at a slow pace for a while.

In summary, though, the answer is "technical issues screwing up a market with way too low of a volume caused people who didn't know about it to freak out"

Just make sure you have cash in before the next major media event.

Or before Bitcoin gets opened up to yet another world market, like Inidia or Saudi Arabia (hint-hint)

Sorry to go a bit off topic but that's not quite how it happened.

The Hunt Bros were ostensibly buying silver because they had no faith in fiat currency.  They never sold silver or silver futures even when the price was peaking.  Although they did contract to purchase much more silver than they could afford, so logically at some point in the future they'd have had to sell contracts one way or another.

They didn't lose money because "everyone called them on their bullshit".     They lost money because COMEX and CBOT board members (i.e., the guys who control the trading rules) abused their position of power to suddenly change the trading rules... specifically, to destroy the Hunt Bros (and conveniently to enrich themselves).

You expect a newborn currency to normalize so quickly? BTC will not even out until it is more widely used and less widely seen as a money-making ordeal.

plus, low volume (www.bitcoincharts.com (http://www.bitcoincharts.com)) and almost nonexistent transaction costs make it easy to manipulate the market... btw for people who do not believe in the Efficient Market Hypothesis (i certainly dont...), i'd recommend checking out http://blog.bitcoinwatch.com/ (http://blog.bitcoinwatch.com/) for trade signal predictions - guy seems to know what he's talking about (even though its based purely on technical analysis)

p.s. am i the only one getting a 404 every second time im trying to access this forum?

BTC will not even out until it achieves some kind of growth-use stasis. Until then, rising demand will spike prices periodically. Speculators wil push it around as they will for some time; there won't be enough volume to be resistant to manipulation for quite some time.

This value-increase curve is built into the currency; it will not go away for quite a while.

My assumption would be the following chain of events:

1st - New people exposed through media want in right now, yields High Demand
2nd - People with already comfortable positions in Bitcoin seize opportunity and sell at premium.
3rd - Same New people who bought at the top, probably on impulse, decide it's not worth it and sell.
4th - Sell off creates doubt, doubt becomes fear, fear leads to "Panic" - more people start to sell.

I admit I'm one of those "new people" - except I didn't commit financially to Bitcoin (not yet at least). In the last 3 days I've watched the volume triple on the Mt. Gox chart and even then the price only slipped $6.  I think gamblers are on the move, some in and some out, which is why the price hasn't moved a whole lot (at least since I've been tracking it ~$20/BTC with volume of ~30K on mt.gox).

Looking at a historic chart one can see that the price was stable and slowly rising until Bitcoin went "mainstream" - I consider this to be an IPO of sorts, if you will, and when you look at it that way it helps ease the nerves. 

I remain confident in the value of Bitcoin and have a personal "entry point" which may or may not be in line with others.

Of course, I don't make these assumptions in anyway from a professional approach so please don't flame/hate if you disagree  ;D
 

Don't you mean Sell off creates doubt, doubt becomes fear, "fear leads to anger, anger leads to hate, hate.. to suffering?"

Hows the difficulty right now? Something's wrong with my miner or its ridiculously high, at 600m/hash on slushs pool since I switched to api.bitcoin.cz, I have not gained any bitcoins. Sorry for asking here, but I can't post in slushs thread.

major spikes, I hope it normalizes soon.

people freaking out, not looking at it longterm

I would agree with all of your observations and add a couple of my own:

1) ALL "currency" (even Gold) is based on some sort of religious (in the technical sense) faith and the resultant "belief" that others share the same belief in the value of whatever.

As a professor of mine observed many years ago: "I will give you a bag of gold coins then sit you outside in the snow for a couple of hours with no clothes. Lets see how long it is before the entire bag of gold is worth trading for a $2 blanket!

2) A truism in any market - what goes UP fast will also come DOWN fast.

3) Fools rush in where angels fear to tread! NEVER NEVER invest money into ANY venture that you cannot afford to lose! NEVER!  :-\

and finally:

4) Bitcoin is VERY immature and wherever there is big money there will also be big time thieves - as we are seeing with the Trojan attack.

It is not fun to watch (even less to be victimized), but it is the only way to really work out the security holes. I am old enough to remember when most banks did not even bother with a password on their 300 baud modem link because "no one could possibly duplicate that ..." Yes it was a LONG time ago - before even "Captain Crunch Whistles"!