Bitcoin Slips Below $500 on MtGox, Still No Clear Solution in Sight

Bitcoin (BTC) recently slipped below $500 on MtGox and hit a low of $480, although it has just jumped back

Bitcoin (BTC) recently slipped below $500 on MtGox and hit a low of $480, although it has just jumped back to near $520 in highly volatile trade.

The $500 level is both psychologically and technically significant as it has since represented some form of support following Monday’s major downturn. BTC had been trading in a flat, stable buffer zone near the $500 level for 6 hours before the bottom fell out. Although it quickly regained its footing, further technical selling is entirely possible now that it has visited new territory.  $500 was also a level of demand on Monday after MtGox provided its update on transaction malleability and that withdrawals were still pending (see chart below).

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Bitcoin, February 10-13
BTC/USD, February 10-13 and its $500 support level

Indeed, BTC has been in slight to moderate decline across the board, with declines on both BTCe and Bitstamp. It is now trading in the $640 range on those exchanges. The declines come as traders remain highly uneasy about BTC’s sustainability following the recent DDoS attacks and halt to withdrawals.

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Solution still pending

For MtGox, the DDoS attacks have been more severe, as they have shut down all bitcoin withdrawals indefinitely, pushing it even further under water as it has resumed its sharper drop-off in BTC value relative to other exchanges.  Based on discussions today on GitHub, a site facilitating collaborative software development, MtGox appears to still be searching for a proper solution, even openly discussing the prospects of widespread standardization of transaction ID’s with other players like Coinbase (user MagicalTux is MtGox CEO Mark Karpeles).  The discussion poignantly displays prospective solutions from other members of the community in trying to help MtGox (and by extension, the Bitcoin world) resolve its issues. At times, MtGox is chided for its alleged unresponsiveness to such discussions, which representatives from MtGox have disputed.

The discount on MtGox relative to its peers is now $140. (For Current Prices)

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