The bitcoin price ditched around 30% over the last 24-hour trading period to lows of $5,721 per bitcoin on the Luxembourg-based Bitstamp exchange, from just under $8,000 yesterday, before slightly recovering to trade around $6,000.
Bitcoin’s drawn out crash has been put down to global market turmoil sparked by oil cartel Opec’s failure to agree to a supply cut last weekend, sending the oil price to historic lows, but some think bitcoin’s move lower could have its origins elsewhere.
Elsewhere, ethereum, litecoin, Ripple’s XRP, bitcoin cash and most other major cryptocurrencies were down between 30% and 40%.
The bitcoin and cryptocurrency market, which remains dominated by bitcoin, making up around 65% of its value, is now down a staggering $100 billion in the last seven days—and has wiped out its year-to-date gains after starting the year at around $7,000 per bitcoin.
Altcoins including ethereum, litecoin, Ripple’s XRP and bitcoin cash had all outperformed bitcoin in recent months but have similarly given up their 2020 gains.
“Bitcoin has fallen to $6,200 as crypto-assets have become caught up in the turmoil we’re seeing in traditional markets,” said Simon Peters, analyst and crypto expert at multi-asset investment platform, eToro, adding: “Bitcoin performance is currently testing major historical support levels of $6,000, so we will be watching to see how price reacts and whether it can hold that level.”
Many have taken the latest fall in the bitcoin price as proof it is failing to act as a so-called safe-haven—an idea that had gained popularity in recent months as bitcoin rose in the face of escalating U.S. and Iran tensions and then apparently gaining on fears the coronavirus could knock global trade.
“Previously seen as a possible safe haven in difficult times, investors now seem to be selling out to take back liquidity in case the coronavirus spreads even further,” said Peters.
“In a time of uncertainty, many investors might feel it is better to own cash or gold rather than more speculative crypto-assets like bitcoin, while others might be looking to free up cash to invest in stocks if and when the situation starts to improve.”
Bitcoin’s latest move sharply lower has caused distress amongst weary crypto traders and investors, with analyst and founder of Quantum Economics, Mati Greenspan, asking: “Did [bitcoin’s mysterious creator] Satoshi just sell his stash, or what?!”
Meanwhile, stock markets around the world have tumbled after U.S. President Donald Trump announced the country will restricted travel to the U.S. from mainland Europe in a bid to slow the spread of the coronavirus.
The fresh bitcoin sell-off, which puts the bitcoin price at half its 2019 highs, is thought to have been exacerbated by the liquidation of bitcoin longs on the Seychelles-based bitcoin and cryptocurrency exchange BitMex.
“$665 million bitcoin longs were liquidated just now on BitMex alone, I repeat, $665 million,” crypto analyst Joseph Young said via Twitter.
Traders and investors call betting an asset’s value will rise, “going long,” while a “short” position means they expect it to decrease in value.
“On top of the general macro panic impacting the market, today’s move lower was precipitated by the liquidation of both bitcoin-collateralized U.S. dollar loans and levered longs in the bitcoin futures market,” said Richard Rosenblum, co-head of trading at digital asset market maker, GSR.
“In terms of sentiment, speculators have been overweight bitcoin, looking for a continued rally ahead of May’s halving,” Rosenblum added. “So the market had been trading a bit long, despite recent weakness.”
The bitcoin mining sector is gearing up for the looming May bitcoin halving event, which will see the number of bitcoin rewarded to miners cut by half—something many hope will be a positive for the bitcoin price.
“It is likely that over the next few months, we may see what status Bitcoin has in the market—the approaching of halving overshadowed by coronavirus and turbulence in the markets,” said Alex Kuptsikevich, FxPro senior financial analyst.
“However, one should not write off purely crypto events that may also have an impact on the sector’s prospects. Now the question is, can the leading digital currency surprise market participants with something new?”