Volatility has erupted in the Bitcoin market once again, as the virtual currency plummeted nearly 30% after an all-time high on Wednesday.
Bitcoin’s value slipped from its record $7,900 by nearly a third at the end of last week, hitting $5555 on Sunday – a drop of $2345 compared with four days earlier.
The cryptocurrency rallied by 14% on Monday, trading at $6,718 – an encouraging rebound for investors.
Market analysts told Reuters that they put the currency’s wobble down to the last-minute decision to abandon the “hard fork” known as Segwit2x, which would have created Bitcoin Gold as an offshoot from bitcoin.
Bitcoin’s growth was almost negligible between 2013 and the end of 2016, moving from $165 to $373 (despite a sharp spike up to $1231 in December 2013) but began skyrocketing in value since the start of this year. At the start of January, bitcoin was worth $1004 but had more than doubled to $2838 by June 10
Despite temporary slumps in mid July (when it fell from $2349 on July 12 to $1934 four days later) and mid September (closing at $4181 on September 12, then $3312 on September 14), the virtual currency’s growth trajectory has remained on the up. This week’s slump-and-rebound seems to fit the pattern of a temporary dip every two months, and is unlikely to signal the imminent failure of the currency.
The decentralised nature of bitcoin contributed to its appeal for investors whose confidence was rocked by Brexit and President Trump’s election. It also has a limited supply, indicating its value could be more stable in a world of currencies subject to quantitative easing.
In response to the fork U-turn, some investors opted to sell up bitcoin for its clone currency known as Bitcoin Cash, which was created in August. This sister specie trebled in value last week, in contrast to Bitcoin’s sudden fall in value, Reuters reported.
Bitcoin Cash peaked at an all-time high of $1644 on Sunday evening snatching the silver trophy from Ethereum as the globe’s second largest cryptocurrency.
Traders bought back into bitcoin again on Monday, sending the value of Bitcoin Cash tumbling once more. It was trading at around $1,097 on Monday, according to industry website Coinmarketcap, representing a fall of 30%.This slide calls into question the relatively steady growth of Bit Cash since early October.