Bitcoin price crash sees cryptocurrency market plunge against the dollar
BITCOIN and other key cryptocurrencies, such as ethereum took a pounding on October 11 as billions of pounds were wiped off their value in minutes.
The cryptocurrency market had been relatively stable recently.
How much did the currencies lose?
Bitcoin lost over 5 percent of its value on Thursday morning, crashing below $6,300 (£4,700), equating to around a $13billion (£9.8billion) loss.
The decentralised digital commodity’s price fell sharply to $6,125 (£4,629) but it did recover briefly to $6,200 (£4,686).
The plummet means Bitcoin is currently trading close to its 2018 low, having hit $5,800 (£4,300) in July.
Ethereum and ripple suffered even worse, dropping by between 10 and 12 percent.
Since January 2018, more than $600billion (£453 billion) has been wiped off the value of cyptocurrencies.
What is Bitcoin?
Bitcoin got you baffled? Here’s what you need to know:
- Bitcoin is a virtual currency
- It’s traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or ‘blockchain’
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which makes it a popular way of funding illegal activities
- A single Bitcoin is worth just under £5,000 today, but the value fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
Why did the cryptocurrency market crash?
It’s not clear exactly what has caused today’s crash, although the recent falling price could be down to a fall in trading volumes since a high late last year.
Short sudden changes in bitcoin prices can also be attributed to trading bots initiating a buy or sell that then triggers others to do the same, creating a domino effect.
Gary McFarlane, a cryptocurrency expert at investment platform, Interactive Investor, explained: “The crypto markets are hugely volatile; on the one hand because they are a new and immature market dominated by individual investors, and on the other hand because it is a new technology the worth of which is hard to assess.”
Shortly after the initial bitcoin price nose-dive, it did somewhat recover clawing back some of its lost ground.