We're back in the cycle.  Didn't get as high as I thought (closer to $3), but the game is on again.  'Wall' at $2.30 disappears, reappears at $2.00 and the market is sold off.  Rinse, repeat.

If the USA and Europe declare bitcoin to be illegal, does it cease to exist?  No, because there is no centralised point of failure.

If I wanted to take down bitcoin and had the resources to do it, I would:

1) Attack (through the courts) the major exchanges.  Make their lives miserable and bury them in lawyers.  Deeply discourage any bank from cooperating with MtGox, etc.  If it's difficult to move between traditional currencies and bitcoin then the general public is much less likely to use it.

2) Smear bitcoin.  Declaring that drug dealers use it isn't enough (many people love drugs).  Setup a legit looking web site for pedophiles that takes payments in bitcoins, then bust it.  Advertise that bitcoin is the currency of pedophiles.  Nothing pushes people's button like this issue.

3) Launch a 51% attack and deny everyone else's transactions.  Expensive to set up, but not beyond the resources of a medium sized government.

4) Play with bitcoin's value.  Raise and dump the price in wild swings.  Make it so unattractive to merchants that no one would want to hold a bitcoin for more than a few hours.  Couple it with step 1.

5) Arrest and prosecute a few people for using bitcoins.  Governments know they can't chase everyone down, but they can make an example of a few to make everyone notice.

Looking back at posts in July on BitcoinTalk, people were being completely serious when mentioning a rocketing price for bitcoins.

"I would be surprised if we do not hit $100 in September."

"I would be happy if it hit $40 by the end of the year."

Right now it seems many people would be delighted if we see in 2012 above $2.

It's been said before but... if you're going to get rid of your BTC as soon as you receive them (to not carry currency value risk), then why deal in BTC at all?  BTC payment services and BTC<->USD transfers aren't free.  The merchant is creating another layer of paper work for themselves.  The only advantage is no charge backs, but as a customer I want to be able to charge back a dodgy business.

Very true.  No sane merchant would ever trade in a commodity/currency that can change several percent in value within the space of a minute.  All the arguments for using BTC fly out the window when the merchant needs to put a hefty margin on their sales to compensate compared to using traditional currencies.

I also agree that the chief person responsible for today's mischief is almost certainly reading these posts.  They're putting on a good show and making MtGox Live interesting to watch, but pumping and dumping the market too often can kill the golden goose.

So, what do we reckon about the fake $2.20 support and the rising price this time?  Another pump 'n dump cycle coming in the next couple of hours?  The market may be wisening up to this (finally) as there's only $1200 or so required to go from $2.30 to the $2.20 'wall'.

New 'wall' at $2.20!  We're saved!      

It really is quite simple to execute and beautiful to watch when it happens.  Those bitcoin traders who wised up to this behaviour months ago are riding the waves, others are getting crushed by them time and time again.  It's a true libertarian market, without rules and regulations, laws and other things that get in the way.

$2.20.  The walls are there to play mind games with traders and to fool bots.  They mean nothing and are only there to look pretty.

Yes, we are saved.  Good times are here again.  That $2.30 'wall' can't just disappear with one mouse click.

It seems to me that bitcoin behaves in almost exact opposite to sentiments expressed on BitcoinTalk. 

Several weeks ago when the price was collapsing and $2 was within sight people were breaking out the marshmallows and singing bitcoin's death song.  Then the price went up by over 50%.

Last week we had posts proclaiming that $3 is somehow the new found level of stability and things are good from here.  Someone showed up to spoil the party and dump the price to the low $2 range again. 

We now have an obvious and anticipated breakout of pessimism again.  Which way will the trade turn from here?

Probably back to $3 by week's end, but each major dump dents confidence in bitcoin and bitcoin's value.  As a transactional commodity, the price doesn't matter.  As a place to park your money for more than a few days (unless you're speculating on value) it's terrible.

Satan Manipulator returned today.  He's been away for a few weeks, but just couldn't help himself today.

Legally or illegally, it's a tall order.  The only way you're going to get the price up in a hurry is by having access to at least a million dollars and buying up all the bids.

There have been various ideas floated before, such as asking sellers to retract their asks and 'force' bids upwards.  It never works.  If only one person doesn't cooperate and acts against the herd in their own interests then the entire manipulation fails.

The other question is, why does the value of a bitcoin have to go up?  It's just as useful at $3 as it is at $30.  If people are buying them up to speculate on the value rising in the future through sitting on their behinds and doing nothing, are they any better than the Wall Street 1%?

One thing is for sure.  Whatever happens, whoever is involved, there is only one guaranteed winner: MtGox.  They must be loving the volume.

Wall comes up, wall comes down, rinse repeat.  If whoever is responsible is reading this forum, I'd just like to say I'm enjoying the show.

Two trades of 5000 BTC for $2.60 and that 2.60 'wall' comes crashing down.  It's beautiful to watch.  Someone is putting on quite a show.

I'm generally a realist and bear on bitcoin's price, but I tend to agree with this point.  I believe we will see a slow rise back to the $3 over the next week. 

5x trades of 1000 bitcoins each at $2.50 within milliseconds of each other.  Hmm. 

Watched it happen.  Interesting stuff.  Makes me wonder why someone does that.  There was a huge flurry of trades at $2.50.  Thousands of bitcoins going back and forth for the same price.

Great speculating opportunity.  Not so great for anyone who is a merchant and wants to do anything useful with bitcoins.  Instant 17% value drop.

Stability around any price (30c, $3, or $30, take your pick) is the best possible outcome for bitcoin.  Imagine being a merchant in August or September:

"I'm getting $10 for my sale"

10 minutes later

"Oh, it's now only $9"

Another 10 minutes

"It's now $12, great!"

Later that day ...

"Damn, it's now $8"

No merchant in their right mind would tolerate the instability we have seen in recent months.  Merchants are not Wall Street speculators, riding a speculative high to make money.

If bitcoin remains at $3 for months or even years it would be a great result.