As we have mentioned over the last year, Bitcoin is an interesting concept that doesn‘t seem to have been figured out completely as of yet. It is behaving too much like a commodity and not like a currency would (see our analysis here).
Minor changes in trading conditions of the currency lead to massive fluctuations in its value. The popular Bitcoin exchange Mt. Gox has suspended withdrawals for an unstated period of time in order to perform maintenance. They are hoping to resolve an issue where withdrawals are taking too long, which has been plaguing them for a couple of months now.
It began working to resolve the issues late last month “” noting that only a “limited number of users and transactions” were impacted “” but it now says that it’s necessary to fully halt withdrawals in order to determine what’s going wrong. “To understand the issue thoroughly, the system needs to be in a static state,” the company writes in a blog post. The trading service continues as usual, but anyone that has stored Bitcoin in the Mt. Gox coffers will have to wait to make a withdrawal.
When the news broke on Friday of the impending shutdown of the withdrawals with no notice of a date when it will be operational, the volatile currency took a nosedive in overnight trading. It lost $120 in value, which at that stage was around a 21% drop. About half of those losses have been recouped and has settled at around $730 per Bitcoin.