Selling pressure sends Bitcoin into 38% freefall

The faith of cryptocurrency believers was tested yesterday as the price of Bitcoin, the most popular of the virtual units in the market place, experienced one of its most volatile sessions of the year.

Prices quoted on the BTC-e exchange fell almost 38 per cent to $309 (€231) per coin as a wave of selling pressure overwhelmed liquidity. A somewhat speedy recovery to $452 even drew comparisons to the equity market’s Flash Crash of 2010.

While rival exchange Bitstamp resisted the same degree of pressure, prices at the UK-based exchange still set a day low of $442 per coin, having started the day at $498.

Bitstamp is currently believed to be the most liquid market, but prices fluctuate greatly across exchanges and markets.

Bitcoin investors were quick to blame algorithmic traders and mounting selling pressure from China for the slide. Yet Bitcoin prices have been declining steadily for weeks.

Another compelling theory doing the rounds on online blogs, consequently, is that the increased selling pressure is the result of greater retailer adoption.– Copyright The Financial Times Limited 2014