Entire market sees vast amounts of value wiped out in short period
Bitcoin has been hit by a dramatic plunge, wiping a fifth off its value.
The same very rapid drop has hit the entire cryptocurrency market, with around 20 per cent being wiped off all of the biggest digital currencies.
The price of bitcoin and other cryptocurrencies now appears to have settled – but with all of that value lost, after a dramatic crash that took just minutes.
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Bitcoin began to plunge on Tuesday evening UK time. Within the space of an hour, it had gone from around £7,500 to £6,800.
It has continued to trade down in the days since, though not quite so dramatically. The price is now at around £6,600, meaning bitcoin has lost 18 per cent over the last week and 20 per cent over the last month.
Other cryptocurrencies were hit by the same plunge. All of the biggest markets dropped around the same time and have stayed at those lower prices since, according to market Coinbase.
Bitcoin is still up over the year, however. It has gained more than 30 per cent since the same time in 2018.
Analysts blamed the sudden drop in the price on a number of technical issues, but said that it was still possible that its value would continue to grow.
“Bitcoin has been due a price break for some time,” said Simon Peters, analyst at eToro, in the wake of the drop. “Since reaching $14k back in June, the cryptoasset has been making ‘lower highs’ and ‘higher lows’, forming a ‘symmetrical triangle’ chart pattern converging towards an apex. Generally, this pattern precedes a breakout either higher or lower, and this is what we saw yesterday.”
Peter pointed to the launch of Bakkt, a new platform for institutional investors, which has seen lower than expected volumes that disappointed many investors.
“Pessimism over the level of activity on Bakkt sparked this most recent sell-off. However, it was the liquidation of $600million worth of long positions on platforms like Bitmex that caused the price to dramatically slump by over a $1,000 in a 30 minute period,” he said.
“Nevertheless, now that Bitcoin is now trading below $8,500, it could become an attractive proposition for investors who want to buy the dip. Fundamentals such as hashrate remains strong, and adoption of crypto is still moving forward at pace. With those conditions in mind, we could see the price rise back up to $10,000 within the space of the next month.”