To those of us who have been with Bitcoin long enough to have seen the great bubble of 2011, what is perhaps the most suprising about the aftermath of this crash is just how similar it is to the previous. In the run-up to June 9, it seemed as though everything was going well for Bitcoin. There was some negative media attention regarding Silk Road, but even there many of the articles were positive, detailing the potential of the website rather than fearing governmental attack. Around June 3, prices started rising super-exponentially increasing from $10 to $30 in less than a week. After the crash on June 9, however, everything seemed to go wrong at the same time. Half a dozen major Bitcoin services were hacked all at once, MtGox went down for nearly a week, and media attention quickly turned sour as a result.

This time, the situation is similar. During the three days during which the Bitcoin price fell from $266 to $60, nearly every Bitcoin exchange was subject to heavy stress, with MtGox being inaccessible for ten hours and BitStamp, BitFloor and BTC-E for one to three. Three Bitcoin exchanges saw their bank accounts closed for legal reasons, and Bitcoin Central lost several hundred BTC in a hack. Bitcoin’s critics, who had remained strangely silent while the currency was still going up to its new all-time high, came out of the woodworks to criticize the currency as soon as the price started falling on April 10. Google Trends volume, after seeing a new all-time high, is now once again back to the same levels that it saw in mid-March.

However, there are also signs of hope. Unlike after the previous crash, dozens of new businesses have started accepting Bitcoin, and many columnists even came out to defend Bitcoin, or at the very least the idea of cryptocurrency more generally. News reports of venture capital investors being interested in Bitcoin are only continuing to increase in number. It’s a claim repeated often both here and elsewhere that there is simply no way to tell where Bitcoin will go from here; for now, perhaps it’s best to simply enjoy the ride.

Bubble and Crash

The Bitcoin price struck a new all-time high of $266.00 on April 10, 2011, before falling back to a low of $54.25 on April 12 and $50.01 on April 16 and recovering to $120-$140 by the end of the month.

Trade volume hit an all-time high even if denominated in BTC, breaking the November 2011 record of 382,186 BTC with two spikes of 556,289 BTC and 572,185 BTC on April 12 and 16, respectively. The USD-denominated daily volume record was on April 12, at a total of $47.6 million.

The Google Trends volume set a new high at nearly 4 times June 2011 levels, before quickly falling back down to slightly above the June 2011 peak by the end of the month.

The number of transactions excluding popular addresses a metric used by blockchain.info to measure Bitcoin transaction activity not including very heavy blockchain-using applications like SatoshiDice, hit a new high of 50,338 on April 11. Other metrics stayed roughly stagnant from March.

Alternative cryptocurrency Litecoin hit an all-time high of $5.89 USD before falling back to about $4, and Ripple’s internal currency XRP hit a high of 0.72 cents. Note that both of these currencies will have a larger number of currency units in circulation than Bitcoin; Litecoin’s final money supply will be 84 million, and the XRP 100 billion, compared to Bitcoin’s 21 million.

Growth from the Inside

The popular Bitcoin electronics retailer BitcoinStore sold 2184 BTC (~$300,000) worth of products in the month of April, putting them roughly on target to hit their goal of $850,000 by June 30.

The popular Bitcoin payment processor BitPay announced that they have passed 5,000 merchants.

Amagi Metals, a precious metals seller that started accepting Bitcoin at the end of last year, announced that they have sold over $750,000 worth of products between April 1 and April 26, including a record of over $220,000 in a single day.

For the first time, another country briefly overtook the United States with the largest number of downloads for the Bitcoin-Qt client. The country in question: China. China has also seen trade volume on its exchanges increase by a factor of thirty these past four months, compared to a finally began shipping their long-awaited ASIC mining hardware. Although power consumption turned out to be roughly six times higher than originally planned, and physical weight and volume two times greater, the devices are still somewhat more efficient, and much cheaper, than those offered by Avalon.

“The Daily Bitcoin“, a new daily podcast discussing issues from all sides of the Bitcoin ecosystem, started releasing episodes.

…And From the Outside

Scandals And Hacks