Just when traders were complaining that bitcoin price had become boring, the cryptocurrency crashed by 13% in less than five hours this morning. The crash marked a sudden change of course for bitcoin price, which had mostly stayed constant within the $6200 price range during the last week or so. Bitcoin’s volatility had reached record lows in the last couple of months, much to the chagrin of traders who viewed it as an opportunity to mint profits. Some were even predicting a rally in bitcoin prices this December due to the launch of bitcoin futures at an ICE-backed venture.
This morning, however, the cryptocurrency’s price began a slide that culminated a bottom of $5,394.61. It has recovered since. At 22:00 UTC, bitcoin was trading at $5603.17, down from its 24-hour high of $6280.82. The cryptocurrency is down by 53.17% since the beginning of this year.
Prices for the top ten cryptocurrencies were also a sea of red. Bitcoin cash, which is due to undergo a fork tomorrow, registered the steepest drop falling by more than 16%. Bitcoin dominates cryptocurrency markets, accounting for as much as 53.1% of overall valuations as of this writing. Not surprisingly then, the overall valuation for cryptocurrency markets suffered as a result of bitcoin’s fall. As of this writing, cryptocurrency markets were worth $187 billion.
What Caused The Drop In Bitcoin’s Price?
It is difficult to ascribe a single reason for the decline in cryptocurrency prices. The crash occurred even as volumes for cryptocurrency trading have mostly remained low in the last month.
Some reports state that the crash in prices is a result of traders selling off their positions for this quarter for tax purposes. Others claim that bitcoin cash’s impending fork tomorrow might be responsible for the volatility in cryptocurrency markets. For context, bitcoin cash is the fourth most valuable cryptocurrency with a market capitalization of $7.5 billion. It emerged from a fork (or split) of bitcoin’s blockchain last year and is scheduled to undergo a split in its own blockchain tomorrow. The split will result in Bitcoin ABC, the original bitcoin cash blockchain, and Bitcoin SV, its competitor backed by Craig Wright – an Australian scientist who claims to be bitcoin founder Satoshi Nakamoto. (Early trading signals show that bitcoin cash’s new avatar might prove to be a formidable challenger to its parent).
Still others are philosophically circumspect about the crash in bitcoin prices. Charles Hayter, founder of www.cryptocompare.com, told Reuters that bitcoin’s price move was a “breakout on the downside”. “Sometimes when things happen, it takes a while for the true reason to become clear – an exchange trade or regulatory action,” he said.