Traders are selling off bitcoins as fast as they can as panic spreads following MtGox’s discouraging update, where it revealed serious technical glitches related to how Bitcoin transactions are getting processed and even insinuating general problems with the Bitcoin protocol itself. No concrete timelines were given as to when the issues will be resolved.
Bitcoin (BTC) fell off a cliff on all 3 exchanges and exhibited some of its wildest behavior since the crypto craze and crash of last December:
- On MtGox, BTC fell as low as low as $500- a drop of around 28% from yesterday’s levels near $700 and 47% from its earlier plateau’s near $950. This level comes close to rivalling its $450 lows during December’s crypto crash, though such a price shouldn’t be considered a serious point of resistance during such market conditions. It has since recovered slightly to $550.
- On Bitstamp, BTC hit a low of $530 before actually recouping most of its losses, now trading near $660, which would represent a loss of only 6% from yesterday.
- On BTC-e, BTC also touched $550 before recovering to near $640, a loss of 11%. The selling on BTC-e has been so sudden that one trade was recorded at $102.
Overall, BTC prices have crossed each other’s values on BTC-e and Bitstamp multiple times during the chaos, and even crossing over those with MtGox during the most volatile periods.
In a remarkable role reversal, the old spreads of $100 or more between MtGox and its peers have flipped places, with users now paying a discount of $50 on MtGox as the value of BTC on the exchange becomes more of a going question.
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Today’s selling reflects a very different prognosis from yesterday’s. Then, the outlook was one where users may eventually get their bitcoins out of MtGox. In a best case scenario, the selling would be unjustified as BTC’s inherent value should be unchanged. In a worst case scenario, users won’t get their coins out, so the value of a bitcoin on MtGox is indeed lower but BTC’s general book value remains unchanged. Today, the entire value of bitcoin may be called into question as doubts arise regarding the integrity of its protocol. Traders are factoring in a relatively low probability of this indeed being the case, and a reasonable chance of remedy if true.
The value of Bitcoin can be checked real-time here.