Bitcoin under attack

Sheeesh where do you start?! We’ve seen it all in last few days. Seemingly starting with Mt Gox temporarily blocking withdrawl in fiat and bitcoins. A flash crash caused by thousands of bitcoins dumped all at once on two exchanges. Russia bans bitcoins. Bitcoin has a malleability bug or something (whatever the heck that is). Denial of service attacks on Bitstamp halting withdrawls there too. The death of Mt Gox ! Edit: Nearly forgot the arrests of BitInstant owners too!

Not sure how much of all this news is fact and how much is rumour at this stage. I’ve been trying to catch up via threads in the forums. Are authorities, the dreaded ‘powers that be’ trying to harm bitcoin, wether orchastrating these waves of bad news or simply taking advantage of circumstances “Never let a good crisis go to waste”, to heap a bit more bad news on top? who knows? but first China, then Russia banning exchanges, which authorities will be next to try and draw the line in the sand? Who was attacking Bitstamp ? Is the timing of this to try and prevent bitcoin being a safe haven when the economy goes tits up ? I’m surprised they forgot to Ddos these forums too.

Anyhow heres how its looking on Bitstamp in the aftermath of all that.

There might be some support at blue levels I marked in previous post, but it does look like bear has resumed based on all this woe which I’ve indicated in red trendlines.

Maybe I have rose tinted glasses or something but on Bitstamp it looks quite robust considering everything.

Heres Bitstamp with Gox overlayed on top.

Gox has moved from being priced almost $200 above bitstamp price to now being priced about $100 below bitstamp price. If you’ve been using MtGox for your technical analysis you are looking at a much bigger drop! Anyway, I don’t know what the deal is with Gox still trying to digest it all but if it has died a death its hard not to think good riddance.

Heres a different view of the bitcoin market, one closer to home for me as a trader of localbitcoins. Heres last 3 months of bitcoin priced in British Pounds.

The crash has hardly budged prices down much at all, so far at least. This is often a source of frustration for me when its hard to trade swings in price, but it also seems a lot more resilient in price. Maybe flash crash is a symptom of fancy electronic trading, and theres still a lot to be said for the old fashioned barter system of local bitcoins, smooths out a lot of the volatility.

The other advantage of using localbitcoins is removing a lot of dependence on third parties. The fiat stays in my bank account, the bitcoins easily shifted to my own wallet. None of the pain being experienced by MtGox users, with whom I sympathise a great deal.

For posterity, that flash crash seems to best be view in BTC-e, so heres a look at that too, with 1 hour candles.

All the way down to $100 then straight back up within 1 hour! Answers on postcard why that happened..

After all this shenanigans is now time to sell bitcoins? In my view its no, for me all of this is growing pains. I was a buyer at higher levels but I’m not too concerned about waiting for a recovery. Wishing I’d left more fiat for buying in at cheaper levels though. Do have niggling interest about the reputed malability bug though, will be trying to find out more about that when i get a chance.

Going to leave it there just now.

3 thoughts on “Bitcoin under attack

  1. It has been a crazy few days! Cost me some fiat too as everything was looking quite bullish again 😦

    The GOX issue is their poor implementation of the wallet software and also allowing automatic withdrawals (the other exchanges process withdrawals manually and have properly implemented wallet software). There is a bug in the Bitcoin protocol but it has been known about and documented for a while (Wiki page is over a year old); it’s not a problem if the wallet software is properly coded.

    The DDoS is attacking this bug as far as I know, and the developers are working on a fix that can be pushed out. The underlying payment network and ledger are still fine though. Looks like this should be fixed by tomorrow.

    How much this affects the price, I’ve no idea.. Have a feeling we could see $100 – 200 again once all this is washed out as people are going to be nervous until some more good news comes along. The cynic in me finds it interesting that the issues have occurred just as hedge funds are starting to get heavily involved after the NY hearings.. Perhaps we’ll see a lot of heavy buying when we hit the lows and the price will bounce up again for quick returns!

    The $102 candle on BTC-E was a fun one on the troll box, I was on there when it happened, from what I could see in chat and the order book someone dumped about 10,000 BTC filling all the buy orders down to $102 and then the next sell order was back up $600 range. It was down to $102 and up again in a matter of minutes – A few people made a lot of money on their very low buy orders when it bounced up again!

    1. Thanks for your detailed comment, clarifies a lot of the things i wasn’t 100% on. Do you have any links about the hedge funds, I don’t know much about that.

      I’ve been playing with fib retracement tool. Think there might be some support around the level we at currently. Next level down looks to be about $528 where the spike reached if i’m reading it right.

      1. There were a couple of articles, but this was the one I found just now:

        Also I didn’t notice but it looks like Scan are accepting Bitcoin payments now too!

        I think that’s probably about the right level. I wouldn’t be surprised if GOX drops to $400 – 450 with Bitstamp and BTC-E about $530. I’ve been shorting GOX on Plus500 the last few days (trying to make back some of the losses I made on having long positions when I think we all expected $900 to be the floor with a break upside! In fact I think that would have happened with the positive news if it hadn’t been for GOX manipulating the market). You need some wide stops as the price is jumping around a lot!

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