One possibility is that traders, reasonably enough, have cut back on how much cash they keep on Bitstamp. This allows bigger swings at night, when few are trading, banks are closed, nobody can wire money in, and there's limited cash for buying.  That may be how the price dropped to $152 so fast. Now it's back around $180 and reasonably steady.

Soon the UK will wake up, followed by the US. A lot of people in the Bitcoin world are going to be very unhappy tomorrow and will have to make some hard decisions. I don't think many will want to pour more cash into Bitcoin right now.

Well, things have settled down for now, around $185. That's still down $20 from an hour ago, and below the $200 support level for the first time. The bottom was at $152 on Bitstamp.

Both the US and UK are mostly asleep, and the banks are closed. When people get up, they'll have to think hard about what they want to do with Bitcoin.  Tomorrow will be interesting.

We're now basically back to where things were before the China bubble.

Price is in a screaming dive. Broke through $200 on Bitstamp and crashed to $161 in under two minutes.

I wonder how much delay Overstock imposes on their employees between when Overstock binds the price of BTC and the employee gets delivery.

Probably more like 2-3 years on that.

Another scumbag/flake exchange. Do not need. Do not want.

From an investor perspective, putting money into Bitcoin requires an exchange that isn't crooked or incompetent, and has significant volume. There are none left. Of the US dollar exchanges:

• Bitstamp - two guys somewhere in Slovenia with a mailbox in London who are $15 million in the hole.
• Mt. Gox - in liquidation.
• Bitfinex - "The Bitfinex trading platform is currently in a beta phase (testing phase). The platform is owned and operated by iFinex Inc. (Bvi), and during this final phase the platform is being prepared to operate under a fully licensed model."
• BTC-e - total buy side market depth right now, BTC225.

Everybody else in USD is too tiny to matter.

The China exchanges matter, but the volume there is widely assumed to be fake, and the prices may also be fake.

Bitstamp was the last exchange that appeared to be legit, and they blew it.

Ripple, Etherium, and Paycoin all tried to do that. How did that work out?

Right. As I've pointed out before, Bitcoin has had two major bubbles - Silk Road and China exchange controls. Both existed only because Bitcoin offered what seemed to be a safe way to do something illegal or restricted. Both collapsed once the relevant authorities figured out how to stop it.

Without a new large use case like those, it's downhill from here.

That's called "speculating with customer funds" and is a felony in many jurisdictions.

Running a Bitcoin exchange is cheap until something goes wrong. Then it's very expensive.

In the Graham and Dodd sense, Bitcoin has no fundamentals. The Bitcoin world doesn't produce anything. There are no net profits. There's no underlying asset value. Bitcoin is zero-sum, a pure speculation.

No, no. Read some of the threads in mining speculation. This has been discussed many times. Price drives difficulty, not the other way round.

Now that's interesting. Their blog post indicates that the mining is outsourced: "Currently all cloud mining/maintenance costs are directed to the Hardware provider, hence, we are open for negotiations with additional mining hardware providers, who can offer favourable terms." Cex isn't a miner; they're a broker for mining capacity.

Apparently they had the option to stop paying their miners. Their contracts with miners must be highly favorable to CES. Now somebody else is stuck with a huge amount of unprofitable hardware. The miners may come crawling back with more favorable terms, trying to mitigate their losses. Or they may just shut down. We'll see the results in the hash rate.

More or less, yes. I still haven't seen a convincing use case for Bitcoin. The Silk Road and China bubbles only lasted until the relevant regulators could stop them. As a payment mechanism, Bitcoin is mediocre. Bitcoin for remittances didn't go anywhere.
Bitcoin never became the petty cash of the Internet. And Bitcoin is an ever bigger crook magnet than I expected. There's still no Bitcoin exchange with proper auditing, and the failure rate of Bitcoin exchanges is well over 50% now.

I was expecting Bitcoin to become a currency used for little stuff like music tracks and in-game purchases. That would be useful, but it never happened.

As I've pointed out before, the Winkelvoss ETF is a dump. They bought a lot of Bitcoins, and now they want to cash out.  If they sold them on an exchange, the price would crash. The ETF is an attempt to get rid of those Bitcoins without crashing the price.

Wishful thinking never ends on here.

Well, the price is back to where it was before Bitstamp went down - around $275-$280. Bitstamp being down only had a temporary effect.

The Paycoin debacle diverted some mining power from Bitcoin for a while, but that's over. (So is Paycoin, probably; it's dropped from $20 to $3, despite GAW's claim that they were going to support the market. Paycoin seems to have been just a pump and dump.)

The $300 support level for Bitcoin has been broken. It wasn't a dramatic event, just part of the long slide.

Outlook: meh.

Don't keep them there. They're still 18 thousand Bitcoins short. Until Bitstamp has an audit, keep only minimal funds there.

That's an excellent point. There are theoretical solutions, involving online contracts, M out of N schemes, and such. Some are even up and running. But none of them are being used much.

Etherium, Ripple, and Paycoin (XPY) were all complex systems built on top of Bitcoin. Etherium is a really complicated "smart contracts" scheme, complicated enough that there are probably exploits. Ripple was supposed to do all sorts of things, but mostly ended up as another altcoin. Paycoin seems to have been an out and out scam. None are being used much.

Bitcoin does one thing well - unidirectional, irrevocable transfers between parties who don't know each other. All its strengths and weaknesses stem from that.

Banks do not work that way. Banks make loans, which are assets to a bank. If you own a loan, you can sell it, which banks do. Loans plus cash plus capital must exceed deposits. Trouble can appear if a broad class of loans lose value, which is what happened in 2008.

Bitcoin exchanges have no secured loans as assets. They are not banks. They are not lending institutions. They have to have 100% of their deposits or they are insolvent.

That seldom works.  Many financial firms have tried that. Enron was a notable example of that going very wrong.

So, withdraw your funds from Bitstamp for a few months. If they're solvent, it won't hurt them a bit. If not...