To say that Bitcoin has had an interesting year would be a gross understatement. The cryptocurrency has gone on a dizzying upward spiral since the beginning of the year. While the Bitcoin has seen some sharp drops, the cryptocurrency has overall gained more than 1000% so far.
According to Mashable, Bitcoin has been breaking records time after time this whole year, finally reaching its highest at $19,796 on December 17. However, since then, the world’s favorite cryptocurrency has been sliding backwards in its steepest decline till date. Bitcoin has slipped about 40% of its highest value to trade at $11,590 on December 22.
Coinbase reported extremely high traffic in Bitcoin trading on December 22, because of which the cryptocurrency exchange had to temporarily shut down Bitcoin trading. This was the day the cryptocurrency’s value plummeted because of which the volume of trade was so high.
While a lot of brokers and analysts have called the last week “bearish” – well, for Bitcoin, that is – the cryptocurrency still hasn’t dropped below its December high of $11,000. Having said that, this weekly decline is the highest in terms of percentage drops that Bitcoin has seen in 3 years, according to Bloomberg.
Due to this, Michael Novogratz, formerly a trader at Goldman Sachs as well as Fortress Investment Group, said that he was going to hold on to his plans of launching a cryptocurrency hedge fund. He felt that Bitcoin is going to drop further to $8,000. He stated in a telephonic interview that he wasn’t comfortable with current market conditions and wanted to re-evaluate his plans before committing to anything. Strangely, he also predicted the previous week that Bitcoin would cross $40,000 in the next few months.
According to him, he still isn’t giving up on the cryptocurrency, despite the constant volatility. He says he still believes that they will be a huge force of change in the world of finance. He also said that he believes that the Bitcoin won’t touch $20,000 for another three to four months after such a steep drop.
Bitcoin entered the mainstream this month with the launch of two major futures contracts by CBOE as well as CME. While the cryptocurrency has again more than doubled in value since the launch of these futures, Bitcoin’s volatility is casting doubts on its ability to sustain its move into the mainstream finance world.
Naysayers have doubts about the value of this digital asset. In fact, UBS Group AG called the Bitcoin the “biggest speculative bubble” in the history of markets. They feel that the latest activity related to cryptocurrencies seem to carry all the signs of the typical mania phase of a bubble.
On the other hand, cryptocurrency enthusiasts say that the technology of cryptocurrencies – the blockchain – is going to change the way finance and investment works. Whatever the opinions, cryptocurrencies are the most closely watched assets today.
Bitcoin’s surging prices have prompted the highest number of searches on search engines. Which, in turn, has pushed prices up further. However, the cryptocurrency is also controlled by market forces, meaning that as the prices increase, more people cash out, which causes a price drop until such time as more people buy in to the asset again. And the cycle continues.
Bitcoin is not the only cryptocurrency to be impacted by a huge drop in prices last week. Ether’s prices dropped by as much as 36% and Litecoin also saw a huge plunge of 43%.
Despite everything, the cryptocurrency world is inching closer to the mainstream, with more and more big players like Goldman Sachs also setting up a trading desk for their customers.