Bitstamp to resume withdrawals, steadying nervous bitcoin market

Fri Feb 14, 2014 4:20pm EST
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By Sam Forgione

NEW YORK (Reuters) - One of the bitcoin exchanges that recently suspended withdrawals of the digital currency on Friday said it planned to allow redemptions to resume later in the day, restoring some confidence to the shaken market.

Slovenia-based Bitstamp, among the largest bitcoin exchanges, said on its website that developers had come up with a solution to thwart the cyber attacks against its platform that had forced the hiatus. It suspended withdrawals on Tuesday, days after one of the best known exchanges, Mt. Gox, suspended withdrawals indefinitely.

"After additional testing, we plan to enable bitcoin withdrawals later today," Bitstamp's statement said.

Mt. Gox has not yet resumed withdrawals and has not issued a public update on the matter since Monday.

Bitcoin prices continued their pattern of volatile trading on Friday, and prices varied widely by exchange. On Mt. Gox, where trading has continued despite the withdrawal suspension, the price plunged to as low as $302 early on Friday, but recovered later in the day following the Bitstamp announcement, last trading at $443, down about 7.5 percent from Thursday.

"The news that Bitstamp is resuming withdrawals restored some confidence and prompted people to buy back bitcoin," said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey. "The fear trade seems to have dissipated."

At CoinDesk, which this week excluded Mt. Gox data from its Bitcoin Price Index, the currency's price was substantially higher. There, bitcoin was quoted at $647.12, up more than 8 percent on the day.

Adding to the choppiness were reports that the online drugs marketplace Silk Road 2 had been hacked and drained of about $2.7 million worth of the digital currency. CNN said the site's administrator posted the news late on Thursday.   Continued...

Mock Bitcoins are displayed on a table in an illustration picture taken in Berlin January 7, 2014. REUTERS/Pawel Kopczynski