This week’s bitcoin review focuses on bitcoin’s latest price drop.
Another flash crash for bitcoin
Bitcoin is plunging again — and this time, it’s pretty ugly. According to figures from CoinDesk, the market “closed” yesterday at $421.46 (around 5pm PT). By 9 a.m., the price had dropped from $420 to $380 and then back up to $400. It was another flash crash, sending bitcoin fans scurrying into talk forums to make sense of it and leaving a lot of people scratching their heads.
While the flash crash itself is a worry, it’s not an isolated incident for bitcoin and the cryptocurrency rebounds from these quite often. However, it’s more worrisome that the price on Monday for a bitcoin was around $470. A $90 swing between Monday and Friday means bitcoin is down nearly 19 percent for the week.
Why? Last time the bitcoin price was this low was in April among rumors of a Chinese crackdown in regulation. This time around, some have cautiously been pointing figures at Chinese tech giant Alibaba’s IPO this morning. It’s expected to be the largest IPO in history, so if you’re a tech-loving day trader, Alibaba may be a better investment than bitcoin. People are selling in both the U.S. and Chinese bitcoin markets to invest in Alibaba, and when the price dropped as low as $400, a bunch of sell orders could have kicked into effect, plunging the price lower.
While it’s likely a factor, it’s hard to blame Alibaba’s IPO for the grand drop in price this week. The Apple Pay news may be rearing its ugly head on the price, and there’s still the pressure on the market of more sellers than buyers. With no trigger event, like another MtGox scandal, it’s hard to guess why the price slumped — or what direction it will go next. While some may be jumping at the chance to buy bitcoins at a lower price, many are just happy they sold their coins when they did.
So far selling my bitcoins is looking like a good move. http://t.co/USZNj9TCE7
— Timothy B. Lee (@binarybits) September 19, 2014
The market this week
Flash crash aside, the bitcoin market started the week around $470 before eventually dropping to around $450 by Wednesday and down another $50 to be hovering around $400 Friday morning. As of 10:15a.m. PST, the price was $397.
For background on why we’re using Coindesk’s Bitcoin Price Index, see the note at the bottom of the post.
In other news we wrote about this week:
- Last week, it was Peter Thiel. This week it’s Julian Assange. Bitcoin is suddenly becoming a popular subject for Reddit AMA’s.
Here are some of the best reads from around the web this week:
- The Wall Street Journal asks an important question: “Is the battle for bitcoin’s soul already over?”
- Two new advocacy groups launched for bitcoin this week. The Digital Currency Council is offering certification courses in cryptocurrencies, while the Coin Center is a new non-profit and research center, spearheaded by former GMU professor Jerry Brito.
- The United Way became the largest nonprofit to start accepting bitcoin after it partnered with Coinbase.
- Bitcoin Jesus has become a Bitcoin Bounty Hunter. Roger Ver, who goes by “Bitcoin Jesus,” has launched a site to track down hackers and pay for their bounty using (you guessed it) untraceable bitcoin.
- Although bitcoin as a currency seems less likely day-by-day, there is still a war waging over one thing that makes it seem more like a regular dollar: the ATM machine.
- You’ve probably noticed that a lot of stories about bitcoin come with photos of physical bitcoins (see our featured image for example). CoinDesk took a fun look at the good, the bad and the ugly of these physical bitcoin incarnations.
Bitcoin in 2014
The history of bitcoin’s price
A note on our data: We use CoinDesk’s Bitcoin Price Index to obtain both a historical and current reflection of the Bitcoin market. The BPI is an average of the four Bitcoin exchanges which meet their criteria: Bitstamp, BTC-e, LakeBTC and Bitfinex. To see the criteria for inclusion or for price updates by the minute, visit CoinDesk. Since the market never closes, the “closing price” as noted in the graphics is based on end of day Greenwich Mean Time (GMT) or British Summer Time (BST).