The effect of the global financial crizis on bitcoin prices

[zby]

Bitcoin, at least in some views, was  created to insulate us from the corrupt financial institutions - but if there was an overall tendency to get rid of risky assets plus USD denominated debt crizis causing USD shortages, then bitcoins would be the first to be liquidated.  At least by sophisticated 'big players'.  This might be similar to gold - i.e. probably good in the long term, long term in the standard meaning - that is years ahead, but bad in the short term of months.  Any thoughts?  

[Cluster2k]

Yes, we saw it in 2008 when gold plummeted while the US dollar rocketed up in value.  Seems silly, but at times of stress you want to be holding cash to pay back cash debts.  It's no good holding shiny pieces of metal when you're leveraged and need dollars.  We're beginning to see this replayed in 2011.

Bitcoin is small enough that it may escape the trap.  It's just a play thing for a few wealthy people to have a bit of fun and speculate with.  The whole market is what, $35M?

[fivebells]

Actually, you want to be holding cash so you can pick assets up at bargain basement prices.

[istar]

When everything is crashing so will Bitcoin, because is speculation and people tend to want to keep their money secure during bad times. They also tend to have less of it. Ofcourse gambling do also increase during bad times, but its more luck based gambling.

However some might think Bitcoins are better than fiat when/if the Euro crash so sure some will still by bitcoins but I would not expect price to skyrocket in the coming months.

[fivebells]

I wouldn't call what's happening in bitcoin over the last few days a crash, anyway.  It's all relative, and relative to the volatility in the BTCUSD rate, the recent price changes haven't been that large.

[RodeoX]

I wouldn't call what's happening in bitcoin over the last few days a crash,...

Haven't you learned that here each time the ticker ticks down its a "Crash!!" and if it ticks up its a "Rally!!!". 

This is an interesting subject. I would have thought that BTC would run contra to stock prices. Like gold does. But that hasn't happened.

[bitcola]

Thing with gold you need to remember is the sell-offs occur to cover margin requirements and things like that.

The bitcoin market is too small for institutions and big players yet. So I would not expect these sell-offs when bad times occur. In fact, on several days when the stock markets have been hit hard over the last few months, gold has taken a hit. Then I've looked at the bitcoin price and nothing happened.

The good thing about bitcoin is that there appears to be no correlation with the markets yet. I see this as a good thing.