Does it take an external event to pop a bubble?

[wobber]

A soap bubble pops when you touch it, or when it rises higher right?

Tulip bubble popped because of the rumors of bubonic plague.

Last 2 bitcoin bubbles popped because of Mtgox.

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[ElectricMucus]

I'd say yes and no.

I think the more inflated the bubble gets the more trivial can the trigger be to pop it. If this current one is pumped back up again, yes it can go to ridiculous heights, but it could also pop because of something equally ridiculous like a unfounded rumour. You see if somebody is irrational enough to buy in during the end of the bubble they will also sell just as easily.
In short: People subject to panic buying are subject to panic selling.

If I had the resources to do such a pump & dump on that magnitude I'd do just that: Prepare two unfounded rumours about Bitcoin one positive one negative. Spread the positive rumour to inflate it and expose the positive and spread the negative one to pop it.

[xorglub]

Did the 2011 and 2013 bubbles pop because of MtGox ?

In 2011, MtGox was hacked *after* the price crashed to ~18, or 10 days after.
In 2013, the lag was bad, but it wasn't anything new. It was mostly felt on the way down.

[RyNinDaCleM]

Did the 2011 and 2013 bubbles pop because of MtGox ?

In 2011, MtGox was hacked *after* the price crashed to ~18, or 10 days after.
In 2013, the lag was bad, but it wasn't anything new. It was mostly felt on the way down.

I agree with this!
No one is denying that Gox has become a terrible service plagued with problems. But the popping of bubbles is not their fault. The lag only kicks in after orders begin processing. The ddos was not the cause of the burst either. If anything, the lag/ddos slowed the sell-off, otherwise we may have seen $10 after the ensuing panic. The lag and the "cool off period" allowed people to rethink their decision to panic sell. 

[codro]

Did the 2011 and 2013 bubbles pop because of MtGox ?

In 2011, MtGox was hacked *after* the price crashed to ~18, or 10 days after.
In 2013, the lag was bad, but it wasn't anything new. It was mostly felt on the way down.

I agree with this!
No one is denying that Gox has become a terrible service plagued with problems. But the popping of bubbles is not their fault. The lag only kicks in after orders begin processing. The ddos was not the cause of the burst either. If anything, the lag/ddos slowed the sell-off, otherwise we may have seen $10 after the ensuing panic. The lag and the "cool off period" allowed people to rethink their decision to panic sell.  

I disagree, the bubble did not pop because people cashed out. It popped because people wanted to make a day trade and grow their portfolios. This is apparent from the record volume following in the days after the "pop".

Personally, after seeing lag get to 20 minutes+, I sold for this exact same reason. I knew people would sell after me, I was almost guaranteed a good trade by the time it executed, and I could always cancel it if it didn't pan out as planned.

I assume there's a very minor percentage of people that actually cashed out, as in, withdrawn their fiat after selling.

But yes, the trading lag did contribute greatly to the bubble popping the way it did. It offered everyone who was vigilant an incredible advantage. I'm fairly certain that if there wouldn't have been any lag, the drop would've stopped much sooner - maybe in the ~$180 range.

[xorglub]

I would say bubbles pop when reaching the tipping point between greed and fear.
The smart investors feel the unsustainable growth and start cashing out, but new money keeps flooding in. The price explodes up faster and faster as long as there are more greedy people throwing money at it, making more people wanting out, and simultaneously more people greedy, etc...
At some point the trend reverses, and then everybody wants out. Boom.

How to call the top, is the 21MBTC question.

BTW there was no lag in 2011. In fact there was no lag yesterday when it went $90->$130 in a few hours and crashed back down either. Lag just adds to the panic. As do hacks, bad news, etc...
There was already lag during the weekend dips on the way up. Lots of it. I don't really remember when it started, sometime around January I guess, but it didn't stop the price from going 10x up since then.

Extreme bad news such as the fork did indeed induce a flash crash, but that's a change in fundamentals. Bubbles are fueled by irrationality.

[rpietila]

There never was a "2013 bubble", not yet at least. Nothing there in the monthly chart. Sorry.

[ElectricMucus]

There never was a "2013 bubble", not yet at least. Nothing there in the monthly chart. Sorry. Lalala I can't hear you.

[codro]

In 2011 there wasn't an actual flash crash, it merely went from a quick rise to $31 back to $18 in the timespan of a few days, after which there was a major hack at MtGox which knocked it offline for a few days.

There was a lot of bad press surrounding this, and people lost confidence - also, there was much less liquidity in the market then, and barely any places to spend any coins. Hardly any bad press now.

[xorglub]

Every bubble is a correction, and every correction can be seen as a bubble. It just depends on the timescale.

There was blood in the streets in 2011, yet on today's all time chart it merely looks like a small bump in the road.
2013 will probably look the same in a few years.

[aigeezer]

Does it take an external event to pop a bubble?

Markets are generally thought to be chaotic systems (hugely sensitive to tiny variations in initial conditions), so chasing explanations of causality is probably futile.

There is a human need to ascribe causality after the fact, and a journalistic need to package any causality claims into simple terms.

I'd be much more interested in learning of evidence of attempted market manipulations - successful or not - analogous to the Hunt brothers silver market saga.

Who, if anyone, tries to pull BTC levers on a large scale, and why?... not the routine "BUY, BUY, BUY", "SELL, SELL, SELL", "HOLD, HOLD, HOLD", "AVOID, AVOID, AVOID" chatter, of course.

Naturally, I'd be looking for evidence of such behavior from the usual suspects in the financial sector, but without evidence (now or in the future) it is just guessing.

[antimattercrusader]

Last 2 bitcoin bubbles popped because of Mtgox.

http://youtu.be/K2ku1A5Ox8U