If the US dollar fluctuated like this, it would cause huge problems to world economy. But if it happens to bitcoin, it's the most innovative thing to have happened to the world economy ever!
Right now market liquidity on Bitstamp (I think that's the biggest exchange?) is 3 million per day. If you want to trade and buy $3m of Bitcoins, you're going to have a huge impact on the price. This is not an unreasonable transaction for larger parties and investment firms.
I don't know what the liquidity on the USD is, but consume an entire days worth of trade volume between USD and say, the Euro, you pretty much have to be a small country.
A lot of these fluctuations will smooth out greatly as Bitcoin's actual use and liquidy goes up. If investment firms and hedge funds start giving serious attention to Bitcoin, you'll see it approach a stability closer to that of gold. Still not the USD standard of stability, but a lot better than what it is today.
So one could say this: If a startup's stock flucuates like this, it's the most normal thing in the world. But if it happens to Bitcoin, it's something we should criticize!
Not on these scales. Artificial adjustments to the dollar happen on month increments, possibly days.
> while the other depends solely on the whims of the free market
Free is relative, the Bitcoin market is still too small to be isolated from manipulation.
> same way startups' stock fluctuates
Care to quote a startup stock that is traded decently (Bitcoin isn't a penny stock) and has a 10% dip in minutes that isn't newsworthy for anyone interested in that stock?
Because I can bet anyone following it would find it newsworthy.
> Not on these scales. Artificial adjustments to the dollar happen on month increments, possibly days.
To give you a sense of perspective, the FED was printing $55bn/month this year [0]. So the FED prints the whole Bitcoin economy ($6.7bn) every 3.6 days, ... day after day, month after month ... for many many years now [1].
[0] http://www.forbes.com/sites/samanthasharf/2014/03/19/fed-cut...
[1] http://static4.businessinsider.com/image/52e4250869bedd404cb...
"traded decently", gotta love those vague expressions.
Any company that at some point was just a small startup, sold stock privately, and today is big, has had these swings. Eg: Facebook, Amazon, etc.
If you don't know this, it probably means you have never bought private stock.
If you don't feel comfortable comparing it with stock, then compare it with gold. Even after thousands of years, and a market capitalization of 8 trillions of dollars, it still has price fluctuations.
Bitcoin has only ~7 billions of dollars of market capitalization. It's comparable to what we call a "penny stock". Anyone with a few millions can move the price. And even with hundreds of thousands of dollars, you could move the price in one particular exchange.
If you still don't understand it, watch this video:
/s