> On the contrary this is just the most pronounced in a series of recent coordinated DDOS / aggressive selling attacks designed to (successfully) inspire panic.
The bitcointalk forums and /r/bitcoin are full of paranoia like this. After months of stress trying to divine market patterns, people see market manipulation and conspiracies everywhere.
The simple truth is that there was an agressive bubble. The doubling period for the price was halving with each iteration[1]. If you looked at the log plot[2], it still looked exponential! A crash was inevitable.
> On another note, mtgox.com the main exchange is shockingly unfit for purpose.
They have a big update scheduled for April 17th[3].
Divining that a price that is rising in a superexponential manner will be going down sometime soon is one of the least fooling things one can do when looking at a graph.
Define "soon". Anyone could have looked at the stock market in 1998 and said that it was sure to be going down soon but it took a few years for that to be the case. And anyone could have looked at the housing market even in 2003 and been waiting for it to go down "sometime soon", and been waiting half a decade for it.
Keynes may have been mistaken on a lot of things but he got one thing right: "The market can stay irrational longer than you can stay solvent."
Quantification: "An asset whose price has doubled several times, with the time between doublings growing shorter and having reached less than a week, will see an abrupt correction to less than 50% of the peak value within 10 days.
> the efficient market is dead and always has been.
This is what people mean when they say "efficient market" in this context:
> In finance, the efficient-market hypothesis (EMH) asserts that financial markets are "informationally efficient". In consequence of this, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information available at the time the investment is made.
There are generally arbitration opertunity's that offer short term rewards well beyond the standard risk reward curve. Which is how many algorithmic traders consistently return high double digit returns with ought leverage. The simplest being having a mix of buy and sell orders that straddle the average.
Except arbitration requires more than just money + information, people doing arbitration must have low fees / latency for example so it's not available to all players in the market. Net result real world markets are not efficient due to various access levels.
Also: Empirical analyses have consistently found problems with the efficient-market hypothesis, the most consistent being that stocks with low price to earnings (and similarly, low price to cash-flow or book value) outperform other stocks. Which is presumably due to cognitive bias. http://en.wikipedia.org/wiki/Efficient-market_hypothesis
PS: It's a reasonable simplification that's useful for the average investor, but not policy makers for example.
While it was not the cause of today's drop[1], that is a big part of the problem. While they are frantically working on decoupling their website from the trading engine, they are still connected, and DDoS attacks are still effective at causing extreme trading lag.[2] Such attacks have been the root cause of several mini-panics over the past couple weeks.[3]
Of course this is bad design, but you have to remember that this website started out as Magic the Gathering Online eXchange. It was built to trade playing cards, not to serve as a multi-million dollar currency exchange. The trading engine was retrofitted for bitcoin, and was stuck with several bad design decisions as a result. While I agree this should have been fixed long ago, MtGox has had its hands full recently. The massive growth in its userbase, the ever-growing verification queue, and the fact that it is expected to be online 24/7 have made things difficult.
"There are a few things that we can implement to help fight the attacks, such as disconnecting the trade engine backend from the Internet. By separating the data center from the Mt.Gox website, we will continue to be able to trade"
Why do you think I'm paranoid? It's my best guess. Despite my tender years I have seen many speculative bubbles in lots of asset classes and have traded them on a private and professional basis.
I agree there are plenty of people in bitcoin ready to be 'the greater fool' [1] but that's only if it fails... they will be self assured visionaries otherwise...
DDOS attacks are fairly common, even for completely unprofitable endeavors, right? Why is it unreasonable to assume that potentially lucrative DDOS attacks would also occur?
>The bitcointalk forums and /r/bitcoin are full of paranoia like this.
'The HN forums is full of smug dismissiveness like this'
It's a blip on the radar in the grand scheme of things, and tons of sites were DDOS'd and simultaneously going slow or down (bitcointalk, mtgox, bitcoincharts, bitstamp). The evidence is my own eyes and refreshing browser timeouts. Everything back to normal now.
Highly unlikely that all those sites would be bought down by "panicked" users alone.
Given profiteering DDOS attacks against casino operators are commonplace, I find it a stretch to think these attacks are not happening regularly against bitcoin sites.
Yeah I'm sure some people do exaggerate.
However mtgox is a toy system and it has been attacked for a while on the recent days, it creates lag and panics.
Anyhow, there's a correction every once in a while.
It then goes higher than before, I'm still not convinced it is a bubble afterall.
The bitcointalk forums and /r/bitcoin are full of paranoia like this. After months of stress trying to divine market patterns, people see market manipulation and conspiracies everywhere.
The simple truth is that there was an agressive bubble. The doubling period for the price was halving with each iteration[1]. If you looked at the log plot[2], it still looked exponential! A crash was inevitable.
> On another note, mtgox.com the main exchange is shockingly unfit for purpose.
They have a big update scheduled for April 17th[3].
[1] https://bitcointalk.org/index.php?topic=171312.0;all
[2] http://bitcoincharts.com/charts/mtgoxUSD#rg180ztgSzm1g10zm2g...
[3] https://mtgox.com/press_release_20130409.html