While I generally agree with what you've said here I don't think it applies as much to bitcoin. The DJIA is huge and there are many, many, many factors that can affect it's movement. Bitcoin is tiny in comparison with a very illiquid (is that a word?) market. I think many people had attributed the huge runup in price to activity in China so it is no surprise that bad news in China would have this effect.
Basically I think it is reasonable to assume that this news is the reason for the decline.
Liquidity != Volatility. There are many cases when it's hard to turn BTC into $US/Danish Pastries/Gold Bars; this makes it illiquid. Try getting your money out of MT Gox.
Comments
While I generally agree with what you've said here I don't think it applies as much to bitcoin. The DJIA is huge and there are many, many, many factors that can affect it's movement. Bitcoin is tiny in comparison with a very illiquid (is that a word?) market. I think many people had attributed the huge runup in price to activity in China so it is no surprise that bad news in China would have this effect.
Basically I think it is reasonable to assume that this news is the reason for the decline.
"Bitcoin is tiny in comparison with a very illiquid (is that a word?) market. "
The idea of Bitcoin being illiquid strikes me as being quite ironic.
Liquidity != Volatility. There are many cases when it's hard to turn BTC into $US/Danish Pastries/Gold Bars; this makes it illiquid. Try getting your money out of MT Gox.
The irony is that Bitcoin is supposed to be a replacement for cash. Technically, it should be the most liquid thing out there.
I got what you're saying and I totally agree. I think the problems with liquidity contribute heavily to the volatility as well.