Bitcoin value plunges as market suspends withdrawals

The price of the digital currency bitcoin slid to its lowest level in nearly two months yesterday after bitcoin digital marketplace Mt Gox said a halt on withdrawals would continue indefinitely due to “unusual activity”.

Mt Gox yesterday said that its problems were a result of a more fundamental flaw in the computer programme that underlies Bitcoin.

The bitcoin price varied dramatically from one exchange to another, with Tokyo-based Mt Gox, the best known operator of a bitcoin digital marketplace, recording one of the biggest drops for the day.

On the Mt Gox platform the currency plunged to as low as $500 yesterday, down more than 27 per cent from Friday’s final price of $692, according to the Mt Gox website.

"This technical issue is of a much larger intensity than we've seen in the past," said Sebastien Galy, currency strategist at Societe Generale in New York.

“The market may be realizing that there are issues which are specific to these forms of currencies.”

The price of bitcoin started falling fast on Friday when Mt Gox said it was temporarily halting withdrawals due to unexplained technical issues.

In an updated statement yesterday, Mt Gox said withdrawals were on hold indefinitely after it “has detected unusual activity on its bitcoin wallets and performed investigations during the past weeks. This confirmed the presence of transactions which need to be examined more closely”.

Mt Gox said a “bug in the bitcoin software” could allow transaction details to be altered.

Agencies