Bitcoin is undergoing a classic correction after quintupling in price over the past 30 days. The currency, which was trading as high as $265 earlier today on Mt. Gox, plummeted and is now trading at around $150.
We’ve reached out to one of the biggest exchanges, Mt. Gox, to see what happened. But another San Francisco-based exchange called TradeHill is saying that
the crypto-currency is falling because of there are apparent distributed denial of service attacks on Mt. Gox and Bitstamp. A denial of service attack happens when an attacker overwhelms a target with external requests, so that it can’t honor regular requests from legitimate users.
This also happened last week when Mt. Gox when Bitcoin reached $142 and hackers attacked the exchange. At that point, Mt. Gox said it had suffered ”its worst trading lag ever.”
The Tokyo-based exchange said last week that hackers are engaging in a strategy to manipulate the price of the currency: “Attackers wait until the price of Bitcoins reaches a certain value, sell, destabilize the exchange, wait for everybody to panic-sell their Bitcoins, wait for the price to drop to a certain amount, then stop the attack and start buying as much as they can. Repeat this two or three times like we saw over the past few days and they profit.”
It looks like this may be happening again. Aside from that, any kind of 400 percent increase over 30 days is probably unsustainable from a technical point of view. A correction at this point would be healthy and natural.
Quick heads up for all you watching the Bitcoin saga: the largest exchange of the currency, MtGox, has reopened following a self-instated halt in trading. The exchange cited an overactive market as the reason for its suspension.
The exchange is now open, and Bitcoin is down. Currently, trades are going through at roughly the $74 mark. The currency was traded as high as $266 this week. Here’s the most recent 24 hours trading of Bitcoin on MtGox, in which you can see the trading cessation:
And, for kicks, here a shot of one week’s trading on the btce exchange, highlighting the rise, and fall of Bitcoin’s valuation:
Interestingly, following a dead cat bounce, long trading halt, and steep initial decline, Bitcoin has rebounded; there are still buyers out in force.
Bitcoin is an interesting topic as the sums at play are massive, in some ways real, and the technology behind the currency is quite neat. This story is not over