Bitcoin Crashed Today
Bitcoin's value plummeted today, by 25% from a high of over 1100 US dollars per BTC to a low value of under 830. The virtual currency, whose value has increased five-fold in just over one month, has been at risk of such a spectacular crash due to speculative investment in the now multibillion dollar market.

While the bitcoin market has historically been volatile, recent events have increased confidence in the currency. Prior to October, many investors avoided bitcoin due to the reputation of Silk Road - the largest bitcoin-only marketplace - as a trading post of illegal goods. Investors had long feared that a shutdown of Silk Road would result in a catastrophic crash of Bitcoin's exchange rate. However, following the October 1st arrest of Silk Road mastermind Ross Ulbricht and the site's shutdown, bitcoin's value dropped from 150 to 110 USD and within a week, recovered to 140 and continued to climb slowly.

At least two major events in November led to even more dramatic increases in Bitcoin investment, that ultimately brought about the current bubble. Increasing investment in China caused the BTC to USD exchange rate on the popular Mt. Gox exchange to reach 395 by mid-November. During the week of November 18th, US Senate hearings on virtual currencies revealed favorable opinions from lawmakers regarding the legitimate potential for cryptocurrencies in the US economy.

Mining pools have sprung up around the internet to support the currency's virtual mining efforts, and major commercial ASIC providers like Butterfly Labs have gone live, further increasing the miner volume.

Bitcoin continued to climb to this morning's value of over 1100, but confidence in Bitcoin was jarred by a change in its legal status in China, where yesterday it was announced that Chinese banks (but not citizens or exchanges) would be prohibited from all bitcoin transactions. Additionally, comments this week from Former Federal Reserve Chairman Alan Greenspan claiming that Bitcoin's value was in a "bubble," together with this morning's report from Merrill Lynch regarding overvaluation of BTC may have contributed to today's dramatic selling spree.