Reason for current Bitcoin crash

[msweb]

What's the reason for the current BTC crash? Two days ago a coin was a little bit more than $14 what was the highest value since the last big crash in June 2011. Within the last 2 days the value crashed down to $10 and may will fall much further on. I'm just wondering what the reason for the crash this time is. Is it once again because of a lot of cracked websites and stolen coins? Does anybody know why this happens right now?

[gnpeer]

Lot of things happened. The biggest factor was the end of pirate's project and mass panic.

[msweb]

Thanks for your fast reply. What do you mean by "pirate's project"? And what else happened?

[Cosmos]

Thanks for your fast reply. What do you mean by "pirate's project"? And what else happened?

This was kind of a strange reason for myself, after a few hours of checking who he was, I found he was a big player that was running a BTC company called Bitcoin Savings and Trust that was offering a staggering 7% return on investments.  Only high deposits were accepted so many other stocks were created called PPT (Pirate pass through) that enabled some sums to be contributed to pirates offering.  Well, a few days ago he closed up shop, and nobody is sure if he'll pay out his investors or not.  He was in possession of several hundred thousand BTC at the time.

[Kazimir]

Thanks for your fast reply. What do you mean by "pirate's project"? And what else happened?

For the past 8 months, some guy called "pirateat40" was running some kinda service (or ponzi scheme as some would say) called Bitcoin Savings & Trust, which was closed last friday.

Tons of people invested money in this thing (I believe pirate was estimated to hold 400k ~ 500k of other people's bitcoins) and now they're hoping to see anything back.

I think the price drop was merely caused by mass panic. Nothing was hacked, nothing was stolen YET (although nobody's sure whether pirate will pay back all his lenders, or disappear with ± $5 million worth of BTC) and certainly nothing happened to the actual Bitcoin concept itself. Just like the earlier Mt.Gox and Bitcoinica incidents, this was just an issue with some independent 3rd party business that happened to offer Bitcoin-related services.

Moreover, all the unique properties and characteristics that made Bitcoin such a revolutionary concept (as listed here or there for example), remain all the same. Essentially, nothing has changed, and Bitcoin has the exact same bright promising future ahead of it, regardless of this temporary panic price drop.

[gnpeer]

Thanks for your fast reply. What do you mean by "pirate's project"? And what else happened?

This was kind of a strange reason for myself, after a few hours of checking who he was, I found he was a big player that was running a BTC company called Bitcoin Savings and Trust that was offering a staggering 7% return on investments.  Only high deposits were accepted so many other stocks were created called PPT (Pirate pass through) that enabled some sums to be contributed to pirates offering.  Well, a few days ago he closed up shop, and nobody is sure if he'll pay out his investors or not.  He was in possession of several hundred thousand BTC at the time.

Good answer. That's what I meant by saying "pirate".

[Kazimir]

he was a big player that was running a BTC company called Bitcoin Savings and Trust that was offering a staggering 7% return on investments.

7% per week, mind you That's over 3300% yearly interest. Doesn't take a genius to figure out that such a scheme wouldn't hold.

[msweb]

Thanks for your posts. I know that Bitcoin itself isn't the problem. I had no idea about Bitcoin's existence in June 2011 so I wasn't able to make profit from the crash then. I'm waiting for the next big crash to buy a lot of coins when the rate is very low. That's why I'm interested in the reasons of this crash and how deep the prize will fall within the next days. If this guy really got $5M in BTC then I don't think he will republish his service and payback all that money. You can live a very happy life with that amount of money if you know what you are doing. So my advise for the masses: Panic more and more so the prize will fall further on and I'll be able to buy coins for nuts sooner or later .

[gnpeer]

Who knows how deep it goes?
I guess, we will find out after this monday when bank transactions kicks in.

[BitCoinsLOL]

 I know the article about Silk Road sent BTC to nearly $20 but what was the cause of it's crash down to $2 in Nov-Dec of 2011. Any info or a link to a thread about it would be much obliged.

[Fluttershy]

You say crash, I say a natural point of the buy/sell cycle.

[deus-ex-machina]

Take advantage of the drop and buy Bitcoins. Then wait until the price goes up again and you can point and laugh at the people who didn't.

[msweb]

You are right deus-ex-machina. The question is just when. The value is going down very quickly. It's currently about $8.5 ( http://bitcoin.clarkmoody.com/ ) and who knows how far it will fall down within the next days. My advise is not buy coins right now. Sell if you have a lot of as long as the rate is 'high' if you don't think in the long term. I think it will fall down to something between $2 and $5 within next week and stabilize around that rate. Then it's time to buy... Just my thoughts.

[wirmola]

he was a big player that was running a BTC company called Bitcoin Savings and Trust that was offering a staggering 7% return on investments.

7% per week, mind you That's over 3300% yearly interest. Doesn't take a genius to figure out that such a scheme wouldn't hold.

But the funny thing is that he has been paying this 7% since november last year, and the word is he is paying all the money from the accounts too.

[WorldOfBitcoin]

No no no, If people stop buying then the price will continue to fall.

People need to buy, and rally to it. If Pirate tries to start a panic the only way to stop it is to buy.

Most people were buying into Pirate at under 10 per BTC, 5point drop doesn't do much for him. The entire scheme requires him drop the price much more. If he cant trick the market he cant make money.

tell holders to not buy/sell now is irresponsible

Besides, long term everyone on here knows long term bitcoin is promising.

[dexvx]

he was a big player that was running a BTC company called Bitcoin Savings and Trust that was offering a staggering 7% return on investments.

7% per week, mind you That's over 3300% yearly interest. Doesn't take a genius to figure out that such a scheme wouldn't hold.

But the funny thing is that he has been paying this 7% since november last year, and the word is he is paying all the money from the accounts too.

Has anyone successfully cashed out from him?

[WorldOfBitcoin]

Has anyone successfully cashed out from him?

yes, He has been carefully watched. He has held his promise on all his payouts. Most people return to his 5000BTC+ higher rates only after getting early buyouts.


But thats the same for any ponzi, its all about giving investors a taste, then cutting and running.

[the_thing]

I've been watching this pirate thing for a while and I didn't really understand how people could be so incredibly stupid. They use bitcoins to escape government bullshit and whatnot, yet they happily run right into scammer's hands. It was a clear and blatant ponzi scheme and the current situation is really disappointing. Even more, when I realize that although I didn't fall for pirate's bullshit, the value of my assets in bitcoins falls rapidly anyway due to the situation on the market.

Now I only hope the panick doesn't last too long and the community wakes up from its 'momentary lapse of reason'. There is no reason why people should sell all their bitcoins for such low prices. If everyone realizes that, everything will be alright again.

In conclusion, people's stupidity deeply saddens me. I beg everyone :  don't let emotions win over logical thinking, don't disappoint the community again by selling for low prices. Otherwise you will harm both yourself and the community.

[msweb]

It's easier to get the people trust if you provide the service as legit from the start. As soon as enough money is sitting in all the accounts the owner will think about 'stealing' all that money. It doesn't matter what the service was about and how he did it. All that counts is the amount of coins got 'stolen' (or better said 'taken' by the project owner). A lot of the people think that it's a problem within Bitcoin itself instead of knowing that it's just that one 3rd party and so the crash of the rate is a logical event. The most of the people still just don't get what it is all about and never will. So those who understand it can profit from the market.

[lebing]

Yeah, a crash of this magnitude set off because people fell into a ponzi scheme is not good press for bitcoin.