Bitcoin exchange Mt. Gox resumes US dollar withdrawals after two-week hiatus

Emily Spaven
Jul 4, 2013 at 11:34 UTC
Updated Oct 16, 2013 at 16:14 UTC

Global US dollar withdrawals have fully resumed at Mt. Gox following a two-week testing period of its new transaction processing system.

The exchange said it still managed to process over $1 million worth of withdrawals over the past fortnight, despite having announced a temporary hiatus.

“As this required a great deal of manpower and was not a perfect solution, we are quite happy with the progress made despite the conditions,” reads the statement from Mt. Gox.

The company also used the statement to announce it has formed relationships with a number of new banking partners across the world, which it claims will create “increased stability”.

There is still a backlog of withdrawals that Mt. Gox has to process and it is increasing transaction speeds to get through these as quickly as possible, but the company expects this to take around two weeks.

“Despite the hiccups, these are exciting times and we are eternally grateful for your confidence and support along this bumpy road,” the statement concludes.

The value of bitcoin has steadily decreased over recent weeks, with a drop from around $89 last week to $78 today, but the question is, what effect will the resumption of US dollar withdrawals at Mt. Gox have on prices?

Bitcoin trader and internet entrepreneur Markus Menno Jong predicts the news will lead to a short-term increase in the price of bitcoin, up to just over $80. However, he believes this will be short-lived, with the price falling once again within a couple of days.

“I don’t think there is just one magic reason why the price of bitcoin is going down, but multiple reasons. The market for bitcoin is very emotional/sentimental – one article or comment on a blog or Facebook page can make the price go up or down by as much as five or 10 percent,” he added.

Jong believes the “hype” is over for this year and the price will fall to the $50 region later in 2013. “Next year, however, bitcoin prices may continue to rise to record levels.”

Vladimir Marchenko, CTO at BTC Global, said it’s impossible to tell what effect Mt. Gox’s announcement will have on the price of bitcoin.

“Mt. Gox resuming withdrawals can, on one hand, result in funds trapped in Mt. Gox to finally find a way out of it to competing exchanges. On the other hand, it could cause increased confidence in bitcoin infrastructure and actually more funds being deposited to Mt. Gox than being withdrawn and, therefore, precipitate bullish price action,” he said.

Marchenko went on to say Mt. Gox is losing its stranglehold on the bitcoin exchange market. “If this trend continues, it is likely that before long Mt. Gox will cease being a price setting exchange.”

Mt. Gox recently registered with the US Treasury’s Financial Crimes Enforcement Network (FinCEN) as a money transmitter, a sign that it is willing to comply with US regulation in order to continue operating. There is a long road ahead, however, as it must now register with the individual states, which is a much more costly and time-consuming process.

The bitcoin exchange has also suffered technical downtime issues lately and a general lowering of user confidence within the bitcoin ecosystem.

What effect do you think Mt. Gox’s announcement will have on the price of bitcoin?

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