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Bitcoin price plummets almost a fifth, hits 11-month low

by Mark Tyson on 7 October 2014, 12:05

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The value of bitcoins has hit its lowest level for almost a year, plummeting to $290 (£181) over the weekend, loosing around 18 per cent of its value before rebounding, reports the BBC. The cryptocurrency's value fell from $356 on Saturday to a low of $290 on Sunday, according to CoinDesk's Bitcoin Price Index, but values have now recovered to an individual bitcoin value of around $330 (£263) each. That represents a painful but less dramatic fall of around 13 per cent over the last seven days.

The digital currency caught everyone's attention last December, when the price of an individual bitcoin shot up to around $1,150. Since then, thousands of businesses including shops and payment-processing firms have started to accept bitcoins as a payment for their goods and services. The larger acceptance for the digital currency should theoretically stabilise the currency's value, but some are speculating that the fall was partly due to the greater number of businesses accepting bitcoins, leading to more of the coins being in circulation - more being 'cashed in'.

Garrick Hileman from the London School of Economics has a different explanation Hileman thinks that the recent swings in value were related to speculative trading, with the steady supply of new bitcoins introduced each day being one significant factor. "Approximately every 10 minutes 25 new bitcoins are mined into existence, which works out to approximately 3,600 new bitcoins created every day. At current prices that's $1.2m in new supply coming into existence every day." He went on to explain "How much of this $1.2m miners have to sell to pay for these things [bitcoin mining] is a closely guarded trade secret, but unless the market can absorb the new bitcoins which miners sell, the price will fall."

However, posters on Reddit's r/Bitcoin, a popular forum for bitcoin enthusiasts, remain mostly positive in the face of the scare. One user commented: "Who else is enjoying the firesale? Who else is picking up tons of cheap bitcoin?"

Roger Ver, an investor into several Bitcoin start-ups also points out in a Tweet: "For anyone complaining about the current price of Bitcoin, remember it has more than doubled over the last 12 months." The Tweet showed a graph of values from Bitstamp, which indicates a $120 Bitcoin value at this time last year.

HEXUS Forums :: 16 Comments

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Posted by shaithis - Tue 07 Oct 2014 12:27
Did any not expect this? When they went up to $1000 after some US politician made an announcement about it being a proper currency I thought that anyone who held onto them were crazy. Well it seems many did and are now trying to sell for less and less.

A currency that is limited and can be stolen without a trace, yeah that's really going to take off. Another bubble bursts.
Posted by KrisWragg - Tue 07 Oct 2014 13:05
shaithis
A currency that is limited and can be stolen without a trace, yeah that's really going to take off. Another bubble bursts.

A currency that is limited is a good thing, why would you want to be penalized for saving, which is effectively what inflation is.

Also how can it be stolen without trace? Unless you give someone your passwords… it's more secure than your bank who could clear your account any day they like and it be your word against theirs.
Posted by semo - Tue 07 Oct 2014 14:12
KrisWragg
shaithis
A currency that is limited and can be stolen without a trace, yeah that's really going to take off. Another bubble bursts.

A currency that is limited is a good thing, why would you want to be penalized for saving, which is effectively what inflation is.

Also how can it be stolen without trace? Unless you give someone your passwords… it's more secure than your bank who could clear your account any day they like and it be your word against theirs.
Tell me about it. My mortgage deposit went into limbo for two weeks and both banks had no idea where the money was. They made me out to be unreasonable for demanding my own money back. Both accounts were in my name too! Got it all back in the end out of the blue. They didn't even tell me it was coming the day before. It just turned up!

The bitcoin blockchain would have have made it easier to trace the money but you'd have to be mad to replace a current account with a bitcoin wallet.
Posted by KrisWragg - Tue 07 Oct 2014 15:41
semo
Tell me about it. My mortgage deposit went into limbo for two weeks and both banks had no idea where the money was. They made me out to be unreasonable for demanding my own money back. Both accounts were in my name too! Got it all back in the end out of the blue. They didn't even tell me it was coming the day before. It just turned up!

The bitcoin blockchain would have have made it easier to trace the money but you'd have to be mad to replace a current account with a bitcoin wallet.

That was probably due to “anti money laundering” I have had large transfers (over £1000) go “missing” because it got flagged as suspicious by one of the banks. As you say, they can't / won't tell you what's happening until it eventually either goes where it was sent or returns back to the original account.

It's fine when it's between your own accounts, but when you are sending money to a relative / friend it can be very annoying (eg. loaned my brother some cash for a car, money took a couple of days and was a real hassle)

But yes, currently Bitcoin isn't the answer to day to day life, but the technology / ideas behind it are spot on and avoid so many issues with modern banking.
Posted by herulach - Tue 07 Oct 2014 16:48
KrisWragg
That was probably due to “anti money laundering” I have had large transfers (over £1000) go “missing” because it got flagged as suspicious by one of the banks. As you say, they can't / won't tell you what's happening until it eventually either goes where it was sent or returns back to the original account.

It's fine when it's between your own accounts, but when you are sending money to a relative / friend it can be very annoying (eg. loaned my brother some cash for a car, money took a couple of days and was a real hassle)

But yes, currently Bitcoin isn't the answer to day to day life, but the technology / ideas behind it are spot on and avoid so many issues with modern banking.

I strongly suspect it would have been anti fraud rather than aml. Most (if not all) banks will have behaivour based monitoring systems designed to detect erroneous fraudulent payments. If you suddenly start sending round £10k and your average payment is £10 its going to proc. I know of at least one bank where SOP is to just stick that in suspense for a couple of days to see if you report it missing.

The reason bitcoin avoids issues with modern banking are identical to the reasons why us all using gold nuggets does. because it isn't a currency and therefore isn't regulated properly.

It simply isn't realistic to operate economies of the scale that exist in the modern world with a fixed currency base. Doing so just puts you in insane boom/bust cycles with minimal policy levers to do anything about it.

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