This relatively mundane observation is actually merely the tip of the iceberg for bitcoin, the poster child of crypto currencies.
Bitcoin has been falling since its peak last year and during the past six months that slide has accelerated, pushed down by scandals such as the collapse of the major bitcoin exchange MtGox in February and then again in April following the delayed reaction and uncertainty.
The second fall can be seen in part as a result of bitcoin’s own success and increased recognition which equally opens markets up to smaller investors and the possibility of panic selling. Bitcoin recovered against the US dollar until August. Promises of fixes to prevent the perceived problems of bitcoin were presented that appear to have reassured the market with promises of more security for bitcoin virtual “wallets”, and better mechanism for funds transfers.
Ripple, for example, is a person-to-person money transfer system that recognises crypto currencies and automatically manages the complexity of exchange rates. But even the technical promise of Ripple was marred by the decision of its founder to sell his stake, causing the price to plummet.
Applying some technical analysis to the situation shows a currency that was wildly overpriced during its climb to its peak in 2013 and then continued to be trading above the moving average in January, March and May and June of 2014.