The biggest online Bitcoin exchange, Mt.Gox, halted trading today. Here’s what you need to know.
1. Bitcoin went up to $266 yesterday…
Yesterday, Bitcoin reached an all-time high, trading at $266 for a few hours. The virtual currency has been on a blistering spike recently. Back in January, Bitcoin was trading at only $15. Now, there are stories about Bitcoin millionaires, people who have so many Bitcoins that they are now actually millionaires.
2. But it Fell Drastically
But, Bitcoin has since fallen … a lot. It went all the way down to $120 yesterday, dropping over 50 percent. The dramatic drop has gotten a ton of coverage from news outlets like Business Insider.
3. Mt.Gox Halted Trading Today for 10 Hours
Because of the precipitous drop in the price of Bitcoins, Mt.Gox, the largest Bitcoin exchange on the Internet, halted trading today for 10 hours. The reason posted on Mt.Gox’s site is, “to allow the market to cooldown following the drop in price.” After yesterday’s massive selloff, the exchange decided to halt trading to prevent more sales and a bigger drop in Bitcoin’s value.
4. This Shows How Volatile Bitcoin Is
This drop just goes to show how volatile Bitcoin is. A virtual currency not backed by any central bank and isn’t supported by a government, the lack of regulations make Bitcoin a very risky purchase. Not only that, but as you can see from yesterday’s fall, the fact that Bitcoin’s not regulated means that there’s no one to prevent massive selloffs (even though Mt.Gox is shut down for now, there are other Bitcoin exchanges that are still operating).
5. People May Start Buying Gold Instead
Even though Goldman Sachs has gone bearish on gold, the strongest fiat currency seems like a better buy than Bitcoin. While Bitcoin has the potential for huge gains, the volatility of the virtual currency means that you can lose a lot of money too. The idea of purchasing a steady currency may be more appealing than investing in Bitcoin right now.