Bitcoin swings wildly as its price plunges

Sandra Mu /Getty Images
  • Bitcoin price briefly dropped below $US11,000 on Friday before recovering to about $US13,000.
  • It’s down from $US20,000 a few days ago – a fall of about 45% from its peak.
  • Fears now abound that a major crash in the cryptocurrency’s price could be underway.
  • Bitcoin’s crash has spread into other cryptocurrencies.

LONDON – The price of bitcoin dropped more than $US4,600 on Friday, sparking fears that a major crash in the world’s biggest cryptocurrency could be underway.

By 2.20 p.m. GMT (9:20 a.m. ET) the price of one bitcoin was down almost 30%, or $US4,680, to trade below $US11,000.

But by 4.30 p.m. GMT (11.30 a.m. ET) it had recovered a little, trading just 20% lower.

At its lowest point so far on Friday, bitcoin was down as much as 45% from its recent high of nearly $US20,000.

As is often the case with large-scale moves in either direction for bitcoin, there doesn’t seem to be any obvious catalyst for the sell-off. But given the general lack of liquidity in the market, small moves can turn into big ones very quickly.

Earlier in the week, bitcoin’s price started to plunge after one of the founders of the influential website announced he would sell his stake in bitcoin.

Unlike more traditional markets, bitcoin has no mechanism to halt trading when there are large losses in its value. These are known as circuit breakers, and they automatically pause trading when assets fall by a set percentage.

As Business Insider Australia’s Paul Colgan and David Scutt pointed out, Friday’s sell-off has had a ripple effect on other major cryptocurrencies.

“The price action appears to be spilling over into other cryptocurrencies, with the second-largest by overall market value, Ethereum, down 26%, and bitcoin spinoff bitcoin cash – which was moving in the opposite direction to bitcoin earlier this week – down a whopping 38% in 24 hours, according to CoinMarketCap,” they wrote.

Earlier this week, Garrick Hileman, an economic historian at the University of Cambridge, told Business Insider he thought cryptocurrencies could trigger the next financial crisis if they became a systemic risk to the financial system.

BITCOIN PLUNGES: Here’s what you need to know

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.