Reported Bitcoin ‘crash’

The business section of the Courier Mail is reporting a crash in the value of Bitcoin, and asks whether it can survive the massive fluctuation in the marketplace: 

As currency crises in Europe piqued investors' interest, a growing number of businesses announced they were accepting bitcoins for an ever-wider range of goods and services. The value of a single bitcoin began racing upward amid growing media attention, smashing past the $US100 ($94.9) mark last week before more than doubling again in just a few days.Then came the crash. 

The price of Bitcoin has imploded, falling from around $US266 on Wednesday (US time) to just above $US40 on Thursday, according to bitcoincharts.com, which tracks trades across the Internet. The best-known exchange, Tokyo-based Mt. Gox, has suspended trading for what it described as a 12-hour "market cooldown." By late Thursday, the currency was back up to just more than $US100. 

This is bad news for the notorious Winklevoss twins, who claim to own 1 per cent of all Bitcoins in existence according to the New York Times.

“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 $US1.3 billion at last count. The Winklevii — as they are popularly known — say they own nearly 1 per cent of that, or some $US11 million.”

While the drop from $266 to $40 could be described as a crash, itwould be difficult to describe the entire event as one.  Within 24 hours the price was back up to what it was prior to the speculative bubble, which seems to indicate that the market perception of the coin currently values it at about $100.

Certainly, such fluctuations would be unwelcome and were they repeated would undermine confidence in the currency.

Bitcoin being a free market product will tend to fluctuate in value, especially as official government currencies go down the gurgler with the continuing debasement of printing presses running at full capacity 24/7.