17 February 2014

Mt. Gox Impact Diminishes as Market Price Dissociates

The last week has been a tumultuous period for digital currency markets, driving prices on the industry’s oldest exchange into a tailspin. While volatility is nothing new for bitcoin, a drastic divergence from historic norms has arisen: Mt. Gox has largely dissociated from the rest of the market, offering insight into the market’s perception of risk in dealing with the company. Since Mt. Gox suspended fiat withdrawals last summer the market has come to terms with the 10%+ premium paid for bitcoin on that exchange relative to others. Customers being unable to withdraw fiat drove a technical bid for bitcoin, since withdrawing bitcoin was the only way to get money out of the exchange for most people over the last seven months. Last week the company also suspended bitcoin withdrawals, pointing to underlying protocol issues as the driver for the issue. The result has been not only the immediate disintegration of the cross-exchange spread, but also a quantifiable dissociation with the rest of the market. Fears that transaction malleability led...


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February 17, 2014 at 11:05AM