Bitcoin’s price recently took an extended nose dive, sending the cryptocurrency’s value downward by nearly a third of its recent record high of almost $20,000 (£15,000).
From $20,000 to $11,000
Last Friday, Bitcoin’s price dropped below $11,000 before experiencing a bit of a recovery. The Coindesk exchange website reported the price plunge before Bitcoin’s price recovered to over $13,000. As the price swung down and up again, some exchanges related to the cryptocurrency have suspended some of their trades.
The last 12 months have been a thrilling ride for Bitcoin. At the beginning of the year, the cryptocurrency’s price was only slightly higher than $1,000. After many ups and downs, it has continued a steady and striking climb throughout the year. Since November, it managed to double its price, bringing it legitimacy as private investors and major firms alike turned their heads in that direction.
That said, just as it started to appear as though there was no direction other than up for the Bitcoin price, the crypto began a rapid slide. It has managed to lose all the ground it gained since the beginning of December.
Bitcoin has Always Been Volatile
Analysts have been cautioning investors that they should be prepared to experience sharp ups and downs. This particular asset has seen rapid changes in price since it came into existence.
“This is exactly how this asset trades and has done since the beginning,” said DataTrek Research co-founder Nick Colas. “It has a lot of volatility and it will for the foreseeable future.”
Friday’s downward spiral brought about a spectrum of trades that overloaded Coinbase, one of Bitcoin’s top exchanges. The technical challenges caused Coinbase to freeze buying and selling on two separate occasions.
Coinbase Wasn’t Alone
The American CBOE and CME exchanges also temporarily suspended their trading of some Bitcoin futures contracts. They have an automatic system to bring trading to a halt if there is a certain amount of movement by an asset or commodity, which was what happened this time.
The price slide itself was expected by many in the industry who believe that when prices skyrocket as sharply as Bitcoin’s did, they are due to head back downward again.
“A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes,” explained Cryptocompare founder and chief exec, Charles Hayter.