In a normal stock market, if it crashes hard like bitcoin is doing now, then FED must step up and print a lot of money to support the exchange price of major banks. But for bitcoin, the only support is its limited supply. I believe, this single support is powerful enough to achieve the things that FED can not do, let's see how this will play out
There was a huge inflow of funds over the past few weeks due to the speculative run ... nobody was losing money and the value of their holdings increased nearly each day.
But that's partly because there are no decent methods to short bitcoin. If there were methods to short, then on the way back down there would be short covering.
The reason there's no decent methods to short bitcoins is because that would require a lot of pioneering in the legal arena to seek regulators approval to trade bitcoins as a commodity. So the methods that exist are like icbit.se, which operate pseudonymously.
But the point was, it isn't just the FED that is needed. If we were to transact freely, there would exist options markets, futures contract trading, lenders, etc. all of whom, in concert, would help lessen the volatility that Bitcoin sees today.
