BitCoin on a Hot Tin Roof
http://www.businessinsider.com/mt-gox-reopens-after-bitcoin-trading-halt-2013-4
Bitcoin Instantly Plunges 35% As Exchange Reopens
That's an instant, 35% drop in value.
Earlier today, Mt. Gox halted trading, saying the market needed to "cool down" after a massive sell-off yesterday that at one point resulted in a 61% decline from the virtual currency's peak intraday price of $266.
The problem, according to the exchange, was a massive influx of new users in recent days, causing the trading platform to lag, which sparked a sell-off among skittish traders.
Trading could be volatile. Bitcoin has been trading below $100 on smaller, less liquid exchanges while the Mt. Gox exchange has been closed.
markets at 10:30 pm EST shortly after Mt Gox reopened....
| Market | Price | Avg. | Change | 30d Volume |
|---|---|---|---|---|
| ▼ mtgoxUSD | 80.0000 | 108.447 | -26.231% | 2370823 |
| ▼ btc24EUR | 57.8100 | 89.219 | -35.204% | 343211 |
| ▼ btceUSD | 71.0000 | 107.527 | -33.970% | 264849 |
| ▼ bitstampUSD | 67.1600 | 109.631 | -38.740% | 245604 |
| ▼ mtgoxEUR | 56.8901 | 88.684 | -35.851% | 244096 |
INSiDe MT GoX...
https://mtgox.com/press_release_20130409.html
( does trading resume on 4/12 at 2 am ? )
Trading is halted until 2013-04-12 02:00am UTC to allow the market to cooldown following the drop in price. Read more details on the support. Additionally trading fees will not be charged within 48 hours of trading resuming (until 2013-04-14 02:00am UTC).
TOKYO - JAPAN - April 11, 2013 Hi everyone, just a quick update on the situation and what happened last night. First of all we would like to reassure you but no we were not last night victim of a DDoS but instead victim of our own success! Indeed the rather astonishing amount of new account opened in the last few days added to the existing one plus the number of trade made a huge impact on the overall system that started to lag. As expected in such situation people started to panic, started to sell Bitcoin in mass (Panic Sale) resulting in an increase of trade that ultimately froze the trade engine! To give you an idea of how impressive things were here are some numbers that we would love to share with you guys: - The number of trades executed tripled in the last 24hrs. - The number of new account opened went from 60k for March alone to 75k new account created for the first few days of April! We now have roughly 20,000 new accounts created each day. Due to these facts we have been busy working on improving things since last week and our team has been working around the clock to improve Mt.Gox to catch up with the demand. We will continue to release several updates today and in the coming few days to improve our system overall performance. Also please note that we may have to close the exchange for two hours in the next 12 to 24hrs to add several new servers to our system. Thank you for your understanding and continuous support!
Regards
Mt.Gox Co. Ltd Team.
( So , up until 4/17 one could buy or sell bitcoins without having funds available ? How much did this " feature influence both crazy buying of the past three weeks or the last two days of selling ? )
TOKYO - JAPAN - April 09, 2013 Orders will only be accepted when there are enough funds available in your wallet! Dear users, starting on April 17th we will be rolling out a minor change on how people place orders via the Mt.Gox interface. Until recently, anyone could place a buy or sell order for Bitcoin, regardless of how much funds were actually available in their wallet, resulting in an order showing a "Not enough funds" error status in the Open Orders list. Starting on April 17th, this counter productive scenario will no longer be possible and will be automatically rejected before validating your order; until you have enough funds in your wallet to match the order value. While this change should only affect a minority of users, it will however have a major impact on our trading platform and improve our system overall performance.
Regards
Mt.Gox Co. Ltd Team.
Mt.Gox Co. Ltd Team.
http://www.zerohedge.com/news/2013-04-11/winklevoss-twins-revealed-owning-1-all-bitcoins
Winklevoss Twins Revealed As Owning 1% Of All BitCoins
Think the 75% plunge in BitCoin values in two days has crushed all former supporters of the virtual currency (which truth be told is only back to levels from a month ago)? Wrong. As the NYT reports, a very unexpected supporting genepool (split into two identical halves) has emerged in the shape of two names previously linked to yet another pre-bubble frenzy name, FaceBook: Cameron and Tyler Winklevoss (collectively, the "Winklevii"). Following stints as Olympic rowers, Simpsons characters, and antagonistic Facebook litigants, the two 31 year-old identical twins are now indirect investors in the latest "currency" craze, whose heyday may well have come and gone, courtesy of owning a whopping 1% stake in all of the entire outstanding supply of BitCoin which at last count was worth $1.3 billion (if maybe a little less now).
An array of speculators have now bid up the price of the bitcoin to the point where the outstanding supply of the digital money was worth $1.3 billion at last count. The Winklevii — as they are popularly known — say they own nearly 1 percent of that, or some $11 million.The decision by the brothers to go public with their position signals a new stage for what has been an experimental alternative to national currencies. Created in 2009 by a programmer or programmers known only by a pseudonym, the bitcoin world has been dominated by anonymous programmers and traders....The 6-foot-5 Winklevii were unfazed by the latest tumult. Indeed, the brothers said they used the low prices to buy more. They argue that bitcoin will have much further to soar once a broader audience sees its virtues: a unit of exchange that can be moved around the world at the click of a button without requiring any payments to Western Union or American Express.“People say it’s a Ponzi scheme, it’s a bubble,” said Cameron Winklevoss. “People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.”The brothers began dabbling in bitcoin last summer when the dollar value of a single coin was still in the single digits. In addition to the purchase of bitcoins, they also say they have invested in a bitcoin-related company, but declined to disclose which one. The currency itself exists as a string of letters and numbers. In order to keep their holdings secure from hackers, they have taken those codes off networked computers and saved them on small flash drives. They said they have put the drives in safe deposit boxes at banks in three different cities.
Nothing like having a string of letters and numbers in safes in flash drives in three cities as a store of value...
To some more cynically inclined observers, for the two brothers who lately have been desperate to get back into the public arena, this latest "investment" is nothing but a rather expensive PR campaign, and one which depending on their cost basis, may have already proven to be a huge loss. However, that will not step them. Or many others desperate to ride on the coattails of the next parabolic bubble:
Other Silicon Valley venture firms, while not holding bitcoins, are starting to show interest in the technology. Tim Draper of the firm Draper Fisher Jurvetson put money into CoinLab, which is doing bitcoin-related projects. Tribeca Venture Partners announced this week that it was putting money into Coinsetter, a start-up trading platform for the currency.
Sadly, a somewhat notable problem with BitCoin, the currency and not the bubblicious asset, is that one can't really use it for much other than to buy more bitcoin, or convert it into fiat currencies: the same fiat currencies that BitCoin is trying to replace:
So far, few real companies accept bitcoins as payment, and the primary place they can be used is an online bazaar, known as Silk Road, where narcotics are the main wares for sale. But the currency’s believers see a future in which Starbucks and Amazon take bitcoins. For their part, the Winklevoss twins have used some of their bitcoin to pay for the services of a Ukrainian computer programmer who has worked on the site of their venture capital firm.
But the drop dead punchline:
“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss said.
That's funny - it is more or less what the heads of the Federal Reserve and all other central banks have said for the past 100 years.
As for the future of BitCoin? Well, if its credibility can survive a collapse like this...
... maybe it just does have staying power. Unless, of course, the other sizable "investors" are none other than the central banks the currency hopes to supplant, just biding their time until they launch the next avalanche selloff...
http://www.zerohedge.com/news/2013-04-11/bitcoin-halted
BitCoin Halted
( So now the question is whether they reopen at 2am on 4/12 /13 ? )
Yes, it is supposedly distributed, but that does not prevent BTC trading platform MtGox from halting trading for a bit, or 12 hours as the case may be.
In other news, according to today's leaked memo from the bearded chairman, one should move out of the BitCoin bubble and boldly go into the S&P bubble.
h/t @thedrickster1
Some Bitcoin markets - note two are presently halted - mtgoxUSD and mtgoxEUR.
| Market | Price | Avg. | Change | 30d Volume |
|---|---|---|---|---|
| ▲ mtgoxUSD | 124.9000 | 108.617 | +14.991% | 2346516 |
| ▼ btc24EUR | 67.8000 | 89.537 | -24.277% | 339242 |
| ▼ btceUSD | 82.0000 | 108.208 | -24.220% | 258260 |
| ▼ bitstampUSD | 73.0000 | 110.186 | -33.748% | 242001 |
| ▲ mtgoxEUR | 92.0000 | 89.593 | +2.686% | 237037 |
Live USD Chart by Clark Moody
This Bitcoin chart shows the live USD price
Live chart for today......April 11 , 2013
http://market-ticker.org/akcs-www?post=219665
Destruction of BitCon-Accepting Businesses
A currency should permit one to express their preference for goods, services and time. That is the essence of currency; it permits you to engage in the intercourse of goods and services without regard to what you produce or desire, provided that someone in the economy values your product or service.
That person could be in the next house over, the next town over or across the nation. It doesn't matter. So long as such a person exists you can transact.
A good currency also allows you to express time preference. That is, your desire to buy tomorrow instead of today.
An ideal currency places no thumb on the scale for any of these preferences. That is, its value is invariant over periods of time. This is important for many people but for business use it can be essential, because many businesses take goods and "refine" them in some fashion. A baker takes wheat and makes bread and pastries; to do so requires time, and he therefore ideally wants the value of currency he exchanges to remain stable during the time between his acquisition of wheat and the sale of the end product. If it is not to remain stable he must know the rate of change with a reasonable degree of certainty so he can adjust his prices to match cost in real terms.
There is a further problem -- businesses in virtually all cases and individuals in many cases are subject to tax. Taxes are a cost of doing business and therefore unknown variation in the value in invariant terms for a currency is therefore quite damaging to the ability to pay taxes. If you can't pay the tax man you're out of business.
When governments adopted currencies and denominated taxes in a given one, they made possible business planning. You could then accept anything but you priced your goods and services in that currency, whether you accepted only that or a whole host of things in payment. This allowed you to stabilize your expected profit margin and thus know you could pay the taxes due to the government.
Before this adoption farmers were frequently dispossessed of their lands by the Lord of the realm, who came through demanding payment of taxes in grain. If you didn't harvest sufficient grain you were screwed and lost your lands. But when payment was made in coin you could always go help on someone else's farm, milk their cows or engage in some other act that had value to someone, get the required coin, and pay those taxes. This was a stabilizing influence in society.
Now here's the problem for BitCon:
Let's say you denominated one month of Internet Hosting in "1 Bitcoin." You accepted payment. Then, in the next few minutes, the value of that coin collapses as happened today.
What happens to you? If your effective tax rate at the expected exchange rate was 25% it has now doubled. There is every possibility you will be unable to pay the taxes due along with the rest of your fixed costs.
If that happens you're done.
This is why businesses should not take Bitcoin.
Sure, when the price was "only" going up it felt great -- it was free money! You got paid 2 BTC for that hosting and guess what -- two days later you were laughing your ass off because you made a huge profit on the FX exchange. If you cashed it, that is.
Nobody in their right mind knowingly takes FX risk with 50% swings in minutes in a common business context. That's nuts. If you're a trader and like speculating in commodities, then sure, have at it. Just make sure that you're ok with the sort of dislocation you saw today, and while you're at it also make sure that you've not deposited funds into a roach motel where you can't get out when you want to -- that is, where there won't be a sudden appearance of "gates" or "limits" preventing you from exchanging back to some other currency and withdrawing the funds.
By the way, that little issue is likely to be a problem too.
Bitcoin is in my view not a currency since it possesses none of the required properties of currency. It is a digital commodity with zero intrinsic value, much like Tulip futures were. Tulip bulbs had actual tangible value, even if small, as they grew into flowers -- futures, on the other hand, had no tangible value at all.
When TulipMania collapsed the government deemed the futures an illegal gambling contract and voided them, incidentally.
You might want to think about that sort of risk too.
I have no intention of ever accepting an alleged "currency" that moves 20, 30, 50% or more in value over a short period of time and you shouldn't either.
K.D gives a great currency risk autopsy of Bitcoin above ...... after yesterday , most can see the risk clearly....
Bitcoin spit the bit today as - after days of relentlessly being pumped higher , the air was let out of the bag by way of DDOS attacks and subsequent manipulated panic selling. Now Bitcoin is being jerked around and yo yo'ed like the toy it has become ! First a rehash of prior bitcoin items
http://fredw-catharsisours.blogspot.com/2013/04/bitcoin-reflection-of-de-facto.html
Now more recent items to consider.....
http://www.infowars.com/how-the-looming-bitcoin-crash-will-be-exploited-by-globalists-to-outlaw-decentralized-crypto-currencies/
( interestingly , the author saw this crash coming , check the time of the post ! )
How the looming bitcoin crash will be exploited by globalists
…to outlaw decentralized crypto currencies
There’s a bigger agenda happening with bitcoin that needs to be publicly stated, and this goes far beyond the issue of the financial harm that will be caused when the bitcoin bubble finally implodes.
Central banks hate bitcoin. They hate it because it doesn’t allow them to loot bank accounts (Cyprus) and control the movement of capital around the globe. Bitcoin, in fact, threatens the very foundation of monetary control that underlies all the corrupt governments of the world. As such, bitcoin is a huge threat to the status quo, making it an obvious target for the globalists to attempt to destroy.
Discrediting bitcoin isn’t enough, however. To really be effective, they need to make bitcoin illegal.
The plot to criminalize bitcoin
How do you criminalize bitcoin? The same way you get guns banned: Plan an attack, make sure lots of people get hurt, roll out all the victims in front of the cameras, then use the sob stories as moral justification to crack down with oppressive new laws.
This is the agenda being planned right now with bitcoin. The recipe works like this:
- A D V E R T I S E M E N T
Step 1) Central banks buy up massive quantities of bitcoin currency, driving the prices into the stratosphere and encouraging millions of people around the world to jump on board the “get rich” bandwagon.
Step 2) Once bitcoin valuations reach a sufficient level of insanity, start a massive selloff by dumping the bitcoins you already bought onto the market, offering them for sale at any price (i.e. sell into falling prices, accelerating the loss in valuations).
Step 3) Watch panic take hold as the bitcoin crashaccelerates, ending in a catastrophic wipeout of “valuation” of all bitcoins.
Step 4) Find “victims” of the bitcoin crash who can tell a good sob story for the mainstream media about how they invested little Johnny’s college money in bitcoin and lost it all. Roll them out on CNN and MSNBC where they cry on camera and talk about how they were ripped off by bitcoin and now they only trust the government from now on.
Step 5) Demonize bitcoin by characterizing it as a “libertarian pyramid scheme.” Lash out against both decentralized currencies and libertarians.
Step 6) Once the demonization gains traction, have traitors in the U.S. Congress announce a “Consumer Currency Protection Act” that outlaws non-central bank currencies such as bitcoin. It’s all “for your safety,” of course. Shut down all online bitcoin wallets and exchanges, calling them “criminal pyramid schemes” and arrest a few people using bitcoin to send a warning message to the rest.
Mission accomplished! You’ve now made bitcoin look like a “pyramid scheme,” you’ve scared the public into being wary of “anti-government currencies,” and you’ve criminalized their use by consumers.
That’s the goal the central banks are trying to achieve right now. It’s all be set in motion by thebitcoin bubble which will inevitably lead to a bitcoin crash.
Bitcoin is being manipulated as a pawn in the globalist scheme to destroy freedom
The bitcoin bubble is to currency freedom as the Sandy Hook shooting was to firearms freedom. In both cases, governments will use a crisis to destroy freedom while claiming to be “saving” the people.
The government WANTS bitcoin to be a disaster, and the mainstream media, which has so far refused to give bitcoin much attention, will leap all over the story like vultures once it crashes.
For the record, I’m a proponent of bitcoin and I want it to succeed in the long run, but the mania speculation happening with bitcoin right now is going to be disastrous for its reputation. It is the worst thing that could happen to bitcoin.
What we would prefer to see is a slow, steady rise that reflects stability with low volatility. Instead, we see extremely high volatility, wild price ranges, desperate purchasing patterns and even purchase queues at some exchanges where the demand for bitcoins is so high that it exceeds the limits of the services (such as Coinbase, where you now have to stand in line to buy bitcoins two days later at whatever “market” prices are offered that day).
Why the bitcoin craze is the modern-day equivalent of tulip bulb mania
Bitcoin has become a casino. It is almost a perfect reflection of the tulip bulb mania of 1637 in these two ways: 1) Most people buying bitcoins have no use for bitcoins (just like tulip bulbs), and 2) The rapid increase in bitcoin valuations cannot be substantiated in any way that reflects reality.
In other words, there is no fundamental reason why bitcoins should be 2000% more valuable today than four months ago. Nothing has changed other than the craze / mania of people buying in.
Mark my words: A bitcoin crash will occur, and a lot of people are going to be financially hurt by it. More and more, this bitcoin craze is looking like a “pump and dump” operation, where the only winners are those who are the first to sell.
When bitcoins were in the sub-$20 range, I was not concerned about any of this. I actually encouraged people to buy bitcoins and support the bitcoin movement. But alarm bells went off in my mind when it skyrocketed past $150 and headed to $200+ virtually overnight. These are not the signs of rational markets. These are warning signs of bad things yet to occur.
By the way, the simple way to prove to yourself that everything I’m saying here is true is to ask yourself this simple question: What do the people who are buying bitcoins plan to spend them on?
The answer is NOTHING! They don’t plan to spend bitcoins on anything. They have no use for bitcoins. Their only play (for 90+% of those buying them) is to buy low and sell high. That’s it! For them, bitcoin is nothing more than a speculative vehicle for gambling with some of their money.
Every speculative bubble market that goes up must come down. And it will usually come down at a multiple of the speed at which it went up.
The velocity of bitcoins is a huge red alert
Now, if most bitcoin buyers were actually using the currency on a day-to-day basis, purchasing things online, sending bitcoins to pay off debts, exchanging bitcoins for services, etc., then that would be different. The circulation of a currency is classically known as its velocity. The higher the velocity, the more frequently the currency is being routinely used for transactions.
But the velocity of bitcoins after the initial purchase is shockingly low. What this indicates is that people are buying lots of bitcoins but then sitting on them. Once bitcoins are purchased, in other words, they basically just sit around and aren’t used for any practical purpose.
Amazon.com, for example, doesn’t accept bitcoins. You can’t buy gas for your truck with bitcoins. You can’t shop with bitcoins at the local grocery store. Until bitcoins are more widely accepted and the velocity rises, there is no fundamental reason why their value should suddenly skyrocket.
Of course, those who are deep into bitcoins right now will call me a doom and gloomer. Sure, it’s okay for them to talk about how the dollar is going to crash, or how the Fed is a criminal operation, but the minute I start invoking mathematical reality with bitcoins, suddenly I become the bad guy.
Well, my answer to the critics is that I have more faith in the laws of mathematics than the self-deluded logic of people who own millions of dollars worth of bitcoins and who therefore have a strong self-interest in promoting the bitcoin mania.
They are blinded by their own positions in bitcoins and cannot see through the fog of self delusion. In contrast to that, I own only two bitcoins worth approximately $400 or so, meaning that I have no substantial position in bitcoins to speak of. Whether bitcoins go up or down does not impact me in any meaningful way. My sole motivation in writing this is to warn others away from the extreme risksthat are now clearly associated with buying bitcoins at present-day prices.
There is nothing new under the sun
As always, there will be people (we call them “noobs” or “suckers”) who think they have stumbled upon the one exception in the universe to the laws of mathematics and that bitcoin somehow represents agalactic shortcut to universal wealth where everyone can become billionaires by trading each other electronic chunks of data with higher and higher numbers encoded in them. These people are fools, and history will prove them so.
After the bitcoin crash takes place, people will ask me, “Mike, how did you know bitcoin was going to crash when everybody else thought it was going to keep going up forever?” And my answer will be, “Because I believe that 2 + 2 = 4.”
If you understand mathematics, you know that the bitcoin bubble is doomed. Sell while you still canand be happy with the profits you’ve made so far. Importantly, remember that the only reason you can sell is because there’s a “greater fool” on the other side of that transaction who is buying your bitcoins.
The problem with all bubbles is that sooner or later the world runs out of greater fools.
Final notes: Why 95% have no clue what I’m writing about
Frustratingly, perhaps 95% of the people who will comment on this article in social media websites have no understanding of high-level mathematics, no understanding of economics, no understanding of free markets, no understanding of greed vs. fear psychology and no historical context through which they might understand what’s happening with bitcoin. Almost no one buying bitcoins has any clue what they are. They don’t even understand the meaning of the phrase “decentralized peer-to-peer crypto currency” and they have absolutely no working knowledge of public / private key cryptography. They have no idea what they are buying and they have no qualifications whatsoever to even discuss the topic.
This is a case where 95% of the people talking about bitcoin need to be told, simply, “Shut the hell up!” because they literally have no clue what they are talking about.
If you are going to talk about bitcoin, make sure you understand the fundamentals of mathematics, cryptography, free markets, economics and human psychology before opening your mouth. Otherwise, you are only announcing to the world that you’re a complete fool who will soon be parted from his money.
And to all those who think they are going to “get rich” by buying bitcoin today and selling it off when bitcoin goes higher, let me offer you a piece of practical advice: After the bitcoin crash, when you are screaming bloody murder and selling your bitcoins at perhaps 1% of what you paid for them, it will bepeople like me who will buy them and thus receive a 99% discount on the bitcoins you once bought at a hundred times the price. That discount is called the “IQ discount.”
You know how lotteries are called a “tax on people who can’t do math?” The bitcoin crash will be a massive global wealth transfer from people who can’t understand the dynamics of decentralized crypto-currencies to those who do understand.
If you don’t follow what I’m saying here, then don’t buy bitcoins. You will only be led to the mathematical slaughter.
http://www.zerohedge.com/news/2013-04-10/bitcoin-drama-continues-after-hours
BitCoin Drama Continues After Hours
Think the great BitCoin drama is over? After plunging by over 60% intraday, touching $100 from an all time high of $265 earlier, BitCoin was just getting started, posting a just as epic rebound to $200 in mere hours... before tumbling once more to $125... before rebounding again to $180... before sliding to $140... and so on. As the vomit-inducing sequence above hints, merely following every twist and turn of the real time tragicomedy that is the minute chart of BTC is a full-time job. And with the bulk of assorted BTC price charts DDoSed into oblivion, or merely down due to record traffic, the only remaining real-time chart may be the following from Clark Moody: we suggest using 1 Minute resolution. Perhaps what is most fascinating, is that unlike regular stock, FX or commodity charts which are largely dominated by robots, algos and other electronic traders, the trading in BTC is purely carbon-form based. So for those who enjoy some seriously hypnotic after hours undulations, this chart's for you.
Great website you have. Do you already accept Bitcoins? I would recommend to sign up at who-accepts-bitcoins.com. They will generate the traffic you need as their database is often searched by bitcoin spenders. It's free though!
ReplyDelete