Bitcoin Just Lost Almost Half Its Value: What's Going On?
Is this a sign of the bubble bursting?
When Isaac Newton first articulated the idea that what goes up must come down, he probably wasn’t thinking about bitcoin. But it fits, at least as of this writing: After the world’s most popular cryptocurrency surged to nearly $20,000 this month, its value plummeted Friday.
At its lowest, the blockchain-based cryptocurrency tumbled to around $11,000, meaning nearly half of its peak value abruptly disappeared. The price fell so much that it led to Coinbase, the biggest bitcoin marketplace, to halt operation temporarily. Is this a sign that the bitcoin bubble is on the verge of bursting, or is this just simply a hiccup?
While the bitcoin subreddit is being inundated by memes mourning this sudden devaluation, reddit user volcaNo9k pointed out an important fact that might be lost in all of the chaos.
“So the 10k prediction by the end of the year was correct after all,” the redditor wrote. “We just didn’t expect it to happen like that.”
In other words, while this seems like a huge collapse relative to a peak of nearly $20,000, a price of $11,000 would still comfortably exceed what would have seemed hugely optimistic projections even a few months ago. It’s all relative, and bitcoin is still doing well relative to its recent past.
Just one month ago bitcoin was valued at $11,000 on most exchanges. At the time, that price seemed outlandish, but as the cryptocurrency craze continued to boost its price to stratospheric levels what it used to be worth seems like peanuts.
Analysts predicted that bitcoin would end the year somewhere in the range of $10,000. That’s still a tenfold increase from the start of 2017, when the cryptocurrency was valued at around $1,000.
Bitcoin has already seen steep drops in value in the past couple weeks, and one emerging opinion among investors is that this correction right before the new year is a reality check for a market whose pace has likely been volatile.
There are also some speculations on the subreddit for bitcoin cash, the cryptocurrency “fork” of bitcoin launched in August that began trading this week on Coinbase that its introduction is a driving force behind this price drop. These claims haven’t been backed up by any analysts, however.
Bitcoin wasn’t the only cryptocurrency hit by this steep slide in prices. All of the most popular “altcoins,” including bitcoin cash, Ethereum, and Litecoin have seen similar drops in value.
While this all might seem pretty scary, it’s important to keep in mind how quickly this sector has grown in hardly any time at all. This dip in prices definitely won’t kill the cryptocurrency market, but it will serve as a reminder for investors big and small to trade responsibly.