Topic: What caused the 2011 Bitcoin crash? (Looking towards the future) (Read 826 times)
Thnx for info
March 22, 2013, 06:24:50 AM
When Mt. Gox was hacked, the hacker fraudulently sold a large number of bitcoins that didn't belong to him, driving the price (on Mt. Gox) to $0.01 (the price on all other exchanges was totally unaffected). However, because these trades were fraudulent, they were all reversed by Mt. Gox before they could be settled, putting the price right back were it was as if nothing had happened. None of the fraudulent trades at $0.01 were actually executed (and even if they were, nobody other than the hacker was actually willing to sell at this price, so it doesn't mean anything), and no legitimate trades took place in June 2011 under $18. However, the whole incident triggered a mass panic and loss of confidence in Bitcoin, causing the price to slowly drop to around $2 over the next several months.
+1
It's not a bubble, just less sellers than buyers. Focus on usability of BTC instead if you want to assess whether its a bubble at this moment.
I would say it is massively underpriced at this moment.
I would say it is massively underpriced at this moment.
We are dealing most likely with a bubble though. Even so, I do believe that BC has strong enough fundamentals to recover from a bubble.
after the mtgox hacking incident, faith in btc is now even stronger because now the security is better and we saw that the price will go back to what the market dictates. im looking forward to $100!
Panic never helps any currency, the EU or BTC 
I think it was when fox news ran the story about the silk road and "your kids buying DRUGS" with "anonymous currency". This attracted all sorts of people to btc for illegitimate reasons. Those people quickly dumped, combine this with all the hacking, and the crash snowballed causing legit btc holders to lose confidence as well thus tanking the price.
That's my theory.
That's my theory.
When Mt. Gox was hacked, the hacker fraudulently sold a large number of bitcoins that didn't belong to him, driving the price (on Mt. Gox) to $0.01 (the price on all other exchanges was totally unaffected). However, because these trades were fraudulent, they were all reversed by Mt. Gox before they could be settled, putting the price right back were it was as if nothing had happened. None of the fraudulent trades at $0.01 were actually executed (and even if they were, nobody other than the hacker was actually willing to sell at this price, so it doesn't mean anything), and no legitimate trades took place in June 2011 under $18. However, the whole incident triggered a mass panic and loss of confidence in Bitcoin, causing the price to slowly drop to around $2 over the next several months.
Hi Guys,
What caused the 2011 Bitcoin crash from $17 to pennies on that Sunday afternoon?
Also, what steps are being taken to try to prevent it from happening again?
thanks for reading
What caused the 2011 Bitcoin crash from $17 to pennies on that Sunday afternoon?
Also, what steps are being taken to try to prevent it from happening again?
thanks for reading
As I understand it, the exchange rate never actually went down to pennies. This is widely mis-reported.
As for what caused the crash...
At the time, there weren't many wallets for storing/receiving/spending bitcoins and there weren't many places available for exchanging them.
The few services that were out there were relatively new and not as security conscious as they should have been. MtGox got hacked, one of the online wallets ran off with the bitcoins of everyone that was using them, and another may have gotten hacked. This caused many people to loose faith in the security of bitcoin (even though nothing in the bitcoin protocol was hacked). The fear and false reporting of "bitcoin hacked" scared a lot of people who all quickly sold off what they had. Lots of people willing to sell at whatever price they could get, and those who were willing to buy were able to offer low prices and scoop up some great deals on bitcoins.
Bitcoin seems highly speculative to me right now. So anything that scares people away from Bitcoins would make the price go down, such as sites getting hacked or a fear that it's too hard to convert BTCs into useful products or services.
Hi Guys,
What caused the 2011 Bitcoin crash from $17 to pennies on that Sunday afternoon?
Also, what steps are being taken to try to prevent it from happening again?
thanks for reading
What caused the 2011 Bitcoin crash from $17 to pennies on that Sunday afternoon?
Also, what steps are being taken to try to prevent it from happening again?
thanks for reading
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