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Bubble popping? Bitcoin more than halves in crazy 48 hours

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Bubble popping? Bitcoin more than halves in crazy 48 hours

Bitcoin more than halved from its peak yesterday in a crazy 48 hours of trading, before recovering back to a five figure value.

Cryptocurrencies and volatility go hand in hand, but the last six weeks have been exceptional, even for this nascent market.

Various theories have been put forward for this week’s abrupt halt to bitcoin and the wider cryptocurrencies’ vertiginous recent climb. These range from concerns about potential bans on trading in the key markets of China and South Korea, to withdrawals to pay for Chinese New Year celebrations, hedge fund market manipulation, the introduction of futures and just general profit-taking.

The true answer is likely a combination of all of the above, but let’s look at the numbers. For a start, over $200 billion (£145.1 billion) has been wiped off the overall value of the entire crypto market. While this was broadly paper profit, one shudders to think about how many people piled in at the top.

The figures for how many times potential newcomers have been googling how to buy bitcoin on credit cards are truly concerning.    

Bitcoin, which enjoyed first-mover advantage and remains the poster child of crypto, peaked at $20,042.90 on 17 December and dipped as low as $9,402.29 yesterday, which equates to a fall of 53.09%. At the time of writing (22:55pm, and that disclaimer is important, given the volatility), Bitcoin had recovered to $11,250.40 with a trading volume of around $20 billion over the last 24 hours, according to coinmarketap.com.

Search online and plenty of conspiracy theorists believe that the introduction of futures contracts, enabling hedge funds to short bitcoin, now means that they control this unregulated market. Both CME and the CBOE have introduced bitcoin futures, with the latter’s first contract due to expire today, so expect further volatility, albeit we know that already.

 

 

 

 

 

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