Bitcoin Forum

Why did the price fall?

In the wake of the crash analysts were left to figure out what caused it. Pantera was among the first to issue a report with a special newsletter sent to subscribers on the 14th.

The Pantera analysis names margin trading as one of the possible causes for the price decline, pointing to a record high in BTC swaps, used to short the bitcoin price, on Bitfinex.

Pantera also cites the widely held theory that miners are a possible culprit behind the price drop, as those who mine "commercially" have to constantly sell coins to recoup costs and turn a profit.

But the fund also offers two novel explanations for recent price weakness. As Bitstamp was taken offline in the wake of a security breach that saw thieves steal about $5m, bids worth roughly the amount were on its books. These orders were cancelled when the exchange suspended trading. As a result,  Pantera says, the bitcoin price didn't have the benefit of these buy orders as its decline began.

The fund also says that a rise in venture capital invested in bitcoin firms may also have meant that funds normally bound for a direct investment in bitcoin may now be diverted into companies working on bitcoin instead. This translates into less capital sloshing through the bitcoin markets.

This is why the market crashed => http://www.reddit.com/r/Bitcoin/comments/2sdwf8/butterfly_labs_is_the_culprit/