Bitcoin prices have declined $US100 in the past week, about 17%, to $US488, according to CoinDesk.
The news comes despite announcements last week that Overstock.com was now averaging $US15,000 a day in Bitcoin sales, and that DISH Network had officially begun accepting the cryptocurrency.
Some analysts are blaming the plunge on a “margin call” at Hong Kong exchange Bitfinex, which is one of the only platforms that allowed users to borrow funds from peer liquidity providers to trade bitcoins. As prices fell through $US530, a “cascade” of calls appears to have occurred, according to Raffael Dannielli of MatLabTrading.
He goes on to say that there is work being done to make exchanges more transparent, and that this could result in a new kind of exchange that supplants those like Bitfinex, whose website contains a minimum amount of information about its operations.
This is one of the reasons why Coinometrics is trying to spearhead the Compare The Exchange (CTE) transparency effort, by surveying exchanges to find out what kind practices they implement…While it is unclear what immediate impact regulatory compliance proposals such as Bitlicenses from New York may have on exchanges (e.g., are all fiat-based exchanges depository institutions?), in the long-run the first two generations of exchanges may be living on borrowed time. That is to say, if the first generation was Mt. Gox and, 2nd generation exchanges are Bitfinex and Bitstamp, then the rise of a 3rd generation, potentially regulated or consortium of “self-regulated” exchanges, could eventually implement some of the suggested CTE “best-practices.