Bitcoin Almost Wipes Out Its Mega Gain Just as Swiftly as It Came
Bitcoin’s rise was meteoric this week — and its decline has been just as swift.
It’s easy come, easy go in the crypto world, where a frenzy over bitcoin pushed the digital currency’s price to nearly $14,000 on Wednesday, its highest level since January 2018. The largest digital asset then reversed course in a matter of minutes after a prominent cryptocurrency exchange reported an outage.
The retreat accelerated Thursday and put the coin’s price back to nearly the same level as five days earlier.
The jump in prices brought back memories of the crypto bubble that burst at the end of 2017, when bitcoin and other cryptocurrencies — beset by regulatory setbacks and fraud-related issues — fell from grace. Bitcoin’s price, for instance, languished around $3,600 six months ago, down from almost $20,500 in December 2017.
Crypto bulls were heartened this year after numerous Wall Street mainstays showed increased interest and wider acceptance of cryptocurrencies and their underlying blockchain technology, helping to push prices higher. Things turned parabolic this month when Facebook Inc. unveiled plans for its own digital currency — many proponents cited the move as long-sought validation of the potential of digital assets to drastically alter the global financial system.
But Thursday’s reversal prompted one of bitcoin’s biggest proponents, Mike Novogratz, to lament not having taken more money off the table before the coin lost nearly all its gains. That may have contributed to its swift demise, according to John Spallanzani, portfolio manager at Miller Value Partners.
It’s a very “tight-knit market,” said Spallanzani. “Most likely Novo hitting bids spread like wildfire.”
Bitcoin dropped as much as 19% on Thursday and traded at $10,671 as of 2 p.m. Pacific time. Volatility is near the highest levels since early 2018, when the crypto bubble was bursting.
“It seems the crypto market got a bit too hot yesterday and is now cooling down,” Mati Greenspan, senior market analyst at trading platform eToro, wrote in a note. “What an incredible market where the price can crash about 15% in less than an hour and bring us back to the highs of the previous trading day.”
Alternative coins, including ether and litecoin, also fell, each losing more than 13%. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital assets, dropped 19%.
Vildana Hajric writes for Bloomberg.