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- Bitcoin prices suffered a drop of over 16% this weekend owing to a host of factors, including concerns over lower liquidity.
- However, it regained almost all the ground lost as markets reopened on Monday.
- A grid blackout in a miner’s region in China may have also played a significant role in the recent drop.
As Bitcoin touches dizzying heights every day, it is pretty reasonable to expect certain pushbacks and volatility in its price. It is rather surprising that the world’s foremost virtual currency token was trading for a mere $9,000 four months ago. Bitcoin has been infamous for its highly volatile nature and the corresponding risks involved in investments. However, in the past three months, the prices have soared to as high as $60,000. Needless to say, it still retains its volatile characteristic, as can be observed from last week’s happenings.
The weekend slump in Bitcoin prices
Data from CoinDesk shows that prices on Sunday came crashing down to $52,148.98, a significant drop of over 16.66%. This drop could be attributed to a host of features, fear over a scarcity of liquidity being one of the major ones. Traders have assured that such volatility is extremely normal during weekends, at a time when the token flow is generally low. Moreover, a colossal grid blackout in China’s Xinjiang region had effectively incapacitated the miners there, bringing down the hash rate by a whopping 50%. Rumours have also been doing rounds in social media claiming that the US Department of Treasury has decided to charge firms using cryptos to launder money. Further, margin trading could also be one reason, where close to $8 billion was traded among 1 million accounts.
Swift market recovery
At the time of writing this report, Bitcoin prices have risen to $57,609.37, regaining about 10.5%. Several analysts have correctly attributed the weekend sell-off to a lull in the market, creating an extrapolated situation that was made worse by rumours. However, as the prices have rebounded, Bitcoins are now expected to take a bullish run in the market. One crucial inference from the bounce-back is that several institutional investors now have increased confidence in the virtual token leading to a curbing of any contagion effect even if a significant crash in prices occur. Though the market has rebounded, it is still too early to predict whether Bitcoins will regain or go past their lifetime high.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
