Bitcoin is in meltdown and it’s dragging other digital currencies with it.
After highs of almost $20,000 at the start of the week, the world’s largest cryptocurrency by market cap fell through $13,000 on Friday, plunging as low as $12,400 on some exchanges, for a loss of around 20% in the past 24 hours alone.
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.
The price action during the Asian trading day was wild. This chart from Markets Insider shows the trading action for bitcoin over the past five hours.
Ripple, the third-biggest cryptocurrency by market cap, soared as much as 60% as bitcoin was tumbling, but more recently those gains have reversed and it is now down 6%.
After hitting a record high of nearly $US20,000 just a few days ago, bitcoin fell to as low as $13,300, then rebounded back to around $15,000, before tumbling again down through its previous lows.
Chris Weston, head of research at IG Markets in Melbourne, said the move appeared based on no particular news and looked “herd driven”.
“If people feared missing out on the way up, the idea you can actually lose money is also a new emotion and people are getting out of all cyrptos at the same time,” Weston said. “Wealth preservation time,” he added.
Bitcoin has now lost more than a third of its value since the highs at the start of the week. On Monday, trading in bitcoin futures began on the Cboe futures exchange, seen by some as an important step in legitimising cryptocurrencies in financial markets.
Unlike more regulated markets like stocks, bitcoin does not have “circuit breaker” rules that halt trading in significant selloffs to avert full-blown panics. Large falls followed by significant gains are common in the bitcoin price action.
However, after its all-time high at the start of this week, recent days have seen sell-offs pause for short recoveries before the price falls resumed again.
This one-hour chart showing bitcoin price back to December 9, via investing.com, shows the brutal bitcoin sell-off and how it accelerated on Friday in Asia.
Unusually in the cryptocurrency space, the fall was not confined to just bitcoin. In recent months, prices for various cryptocurrencies have often moved in opposite directions as traders moved money out of one and into another.
As seen below in data from Coinmarketcap, the major cryptocurrencies are all getting hammered.
Ripple appeared to be the least affected by the broad cryptocurrency sell-off. According to Alexey Ivanov, CEO and co-founder of Polynom Crypto Capital, a Moscow-based cryptocurrency and blockchain investment fund manager, it was supported by strong demand from Asia.
“Asians are going mad for Ripple,” Ivanov said in an interview with Forbes.
Trading volumes in South Korea and Hong Kong were well above normal on Thursday, perhaps driven by an announcement from the company earlier in the week that that a group of 61 banks in Japan, organised by SBI Ripple Asia in Tokyo, will launch a new digital payments systems pilot program with Woori Bank and Shinhan Bank of South Korea using the Ripple blockchain network.
“People feel comfortable with its name and the technology behind Ripple,” Trevor Koverko, CEO of Polymath, a blockchain platform for startups looking to launch their own cryptocurrencies, told Forbes.
“A lot of people are beginning to realise how big of an opportunity there is between business and the blockchain…and that’s making Ripple the early winner here.”
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