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Bitcoin falters in its price

Bitcoin has had its ups and downs over the past year with the FBI arrest of the Silk Road web owner and the bankruptcy of MTGox exchange but its price is retreating and unable to advance, according to The N.Y. Times this morning.

Representatives Of A Bitcoin Kiosk Company Demonstrate The Currency Product On Capitol Hill
Photo by Drew Angerer/Getty Images

The closing price on Monday was $435.60 a drop of 12 percent down from the $492.95 opening price listed on the CoinDesk website. This is a large drop from $1,150 high at its peak in May 2013 before the criminal charges of Silk Road in October which caused an immediate plummet into the $300 range.

The BTC-e had a short-lived crash to $309 on Monday. It ended the day at $460. Why the volatility? News reports emphasizing the legal woes and financial mismanagement have been strong in the media coverage. Benjamin Lawsky, the Superintendent of the New York Financial Services, came from a negative viewpoint on Bitcoin to announcing the ability of New York merchants to submit an application for a BitLicense in order to conduct transactions.

The Lawsky turn-a-around was good for Bitcoin proponents and exchanges as Lawsky also announced that there was a 45 day period until July 23 in which the public will be able to comment on the proposal. At that time Lawsky will look at the changes with his committee. It appeared fair but many doubts and complaints were raised. Adam Draper, a venture capitalist did not see the advantage and found it too restrictive and unproductive.

Lawsky did give the media an opportunity to ask questions. He was open to the ease of transfer for Bitcoin or other virtual currencies and made note that residents of New York who transferred money out of the country to family and friends found the cost of Bitcoin small compared to high costs of money wire transfers. The difference can be the cost of $100 in a money wire compared to pennies in a bitcoin online transfer.

“I think ultimately, these rules are going to be good for the industry,” Mr. Lawsky said. He wondered about the future of bitcoin, however. That appears to be the question. Bitcoin has increased the number of merchants accepting bitcoin payment but the wallet holders need a reason to open a wallet and use bitcoin for a payment transfer.

The federal Consumer Financial Protection Bureau issued a warning on virtual currency last week, which spurred negative comments and doubts about its future. In that time period last week, DISH announced its acceptance of Bitcoin beginning in September. DISH's 13.9 billion in annual sales makes it the second largest technology provider that accepts bitcoin payment after DELL. Projected bitcoin payment at another bitcoin payment retailer expects about 5 percent in bitcoin for payment this year.

“Over all, the sense is that regulation is going to impede the growth of Bitcoin, which is contributing the negative sentiment,” said Gil Luria, an analyst at Wedbush Securities.

Steven Englander, a research analyst with Citigroup, stated during the price level at $600 that, “The stability probably means that there isn’t much going on.” That period of inaction brings a lull into consumer activity and it is the consumer that is needed to make the push. He added that expectations for its future add value to Bitcoin. That is what many are waiting to see and asses its future.

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