Bitcoin having worst week in more than 2 years, but it's not just Bitcoin...
Bitcoin has been tumbling, down around 20% at one point just today.
Earlier in the week, Bitcoin was trading for just under $3,000 per coin, then suddenly the rug was pulled and Bitcoin has been fading ever since.
A few hours ago Bitcoin traded as low as $2,000 per coin, making for over a 30% decline in prices since the highs of Monday.
However, it's not just Bitcoin that has been falling. If you look across the virtual currency space you will likely see a sea of red.
What gives?
Well a couple things actually.
First, there has been the major outages and hacks on major virtual currency exchanges.
On Monday evening Coinbase was shut down due to extremely high trading volumes. Bitcoin seemed to weaken considerably after that announcement.
Coinbase has been one of the better exchanges out there to date and they have been having numerous problems recently. Today when I tried to log in, the site was again down with something along the lines of this posted on their website:
We are investigating issues with load times and customers may be unable to load or log in to the website during this time.
It was unclear how long that warning had been up, but I know for me personally, I was unable to access the site for over 2 hours.
Then there was the issue with Bitfinex.
They tweeted on Tuesday that they had been under a DDoS attack. Which further squashed confidence in the space.
Especially when you consider that Bitfinex had over $65 million stolen by hackers last year alone.
Basically people are being reminded in a very abrupt way that the infrastructure for the virtual currency space is still very much in it's infancy and liquidity can be a problem at times.
The founder of Atlantic Financial and board member at Bitcoin Foundation, Bruce Fenton was less worried and had this to say regarding Coinbase:
"Coinbase's issues are just typical growing pains. When the whole financial system is upended, it's bound to have some bumps in the road."
I especially like that middle part, "When the whole financial system is upended...."
Remember folks, these virtual currencies are either going to change everything in terms of how people transact or they are going to zero at some point. They are either going to be worth a lot more or a lot less.
I am betting on the former.
Some other possible causes for the recent weakness in the space:
The Federal Reserve raised interest rates, which in general tends to put a damper on riskier assets. US Tech stocks took a bit of tumble ever since the hike. It is a bit unusual for the FED to be raising interest rates at a time when inflation rates are going down, but we have been living in unusual monetary policy times for quite some time now.
Also...
At the time that Bitcoin was declining, there was a closure of millions of dollars in long positions on OKCoin. Which is one of the major leveraged Bitcoin exchanges. That selling likely exacerbated the moves down.
The actual decline was probably caused by some combination of all of the above. Likely initially sparked by a change in confidence. Markets sure are fragile things aren't they?!
Stay informed my friends!
Sources:
https://seekingalpha.com/news/3273785-bitcoin-track-worst-week-two-years
https://www.bloomberg.com/technology
Image Sources:
http://fortune.com/2017/03/09/bitcoin-sec-etf/
https://www.bloomberg.com/technology
https://www.guerillastocktrading.com/business/why-the-coming-fed-rate-hike-could-leave-you-broke/
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It seems like a harsh reminder at the moment.
However, I am reminded of Andreas' talk about Sewer Rats and Bubble Boy. We need attacks like this on the infrastructure so we learn our lessons.
The trust of the masses must be earned by our learning curve right now.
That is so very true in how sometimes we can have that liquidity in our virtual currency world. Growing pains are painful, but the outcome will be most beneficial for those who are patient.
Absolutely.
Thankfully, we are on this side of mass adoption.
I don't think we have come anywhere close to mass adoption - these are these teething pains :)
Agreed.
Watch out below. What will happen when the stock market crashes or when they announce a recession or when a gov shut down occurs????? Fiat currencies are risky. Most of the money made is either longggggg term investments or by crookery.
Truth.... speak it.
Its time to buy I should say.. As an avid trader you should buy @ every dip and I bet it will go to 3300USD in near future..
So Buy some and hold .. "Diversify and hedge"
I agree, it is time to buy.
I'm in the U.S. and bitcoin kept teetering on that $3,000 line before it dropped off. I would not be surprised if it breaks through to your $3,300 price target on its next run.
It's funny how the age old advice continues to ring true - buy some and hold... "Diversify and hedge."
Yeah.. old is gold.. alwayss
we have seen worst, segwit activation will pump the price higher 3k$. All emotionnal manipulation to accumulate more bitcoin.
Kudos for mentioning the interest rate hike. It's an important and major factor that many in crypto haven't been talking about. That said, long term, capital flight will persist.
The funny thing is that almost all cryptocurrencies are going up or down at the same time. Even the level of increase or decrease seems somehow bit correlated.
Maybe there are too many people going for the pump and dump approach. Or this whole market is fully controlled by a happy few buying and dumping at the same time.
Maybe it is time there is some central market watch on the trading activities but that will take a while
I think it is also due to the fact that there are a lot of people out there that see crypto's as something with a lot of potential but don't understand the technology behind each coin and just invest in multiple coins to diversify. So they put money in on 3-4 currencies and cash out on all when they think the time is right. All does seem correlated and therefore traders will also act like it. The same patterns are repeating itself and there are some traders taking advantage of it.
It happens in the stock market too. When a leader starts to move, the followers move with it. Natural tendencies that aren't unique to crypto. With that said, because we are so young and small, the movements can swing violently when our posterchild, BTC moves, particularly with the Altcoins since most of them require BTC to buy them. Once there is a more level playing field and a decoupling of BTC to Altcoins I'm guessing we won't see the market sway with the same ferocity. Lets' see
You just need to be smart to invest when is low and sell when price is high :) btw if any cryptocurrency get under control of markets, most who trade with it will leave it and when become less attractive all this hype about crypto will gone, so lets just home that wont happened :)
So. when they are telling us, cryptos are not manipulated, there might be a little issue. Last time, a bunch of big players moved into this new market. Maybe, by buying and selling big amounts, they tested their opportunities.Nevertheless ordinary people make their moves to gain some fortune, so there is a lot of volatility. Not to speak of just normal corrections in the value of an asset.
Yup, as others have said, just hold on! It's just frustrating as you mentioned when Coinbase went down today, it was when BTC and ETH bottomed, so I couldn't add to my positions.
This is only looking at long term candles such as 1 day and longer but back around may 27th It dropped around 25%in only a few hours but the long term chnage was small since it went up about 25% the same morning.
Just another bit of turbulence, I see it all coming back up soon.
source
It will be a smooth ride eventually :)
Source: Reddit
Looks boring lol... but yeah over long term it will smooth out once it discovers a valuation. .. I've been playing the price moves though hehehe... regardless I believe in Bitcoin and Steem.... for what they are beyond the speculation and trading.
Agreed! Just gotta let it ride the coaster.
I really like this 😂
🤣 😂 🤣 😂
Yes, this is probably a multifactorial thing. A little bit of this and a little bit of that worked together to drive the price down. Anyway, the masses think the all time highs in the stock market are a sign that everything is great and probably think the BTC and altcoins prices sinking are a sign that cryptocurrencies are not that good...
This decline was coming. It will shake out the weak hands. HODL strong.
Agreed. These shakeouts will keep happening all the way up. They are buying opportunities.
Also recent events highlight importance of keeping large amounts on the centralized exchanges. They have the volume, so are good for trading, but the majority of your coins should be kept more securely.
Its no coincidence that with the troubles of Coinbase, Bitfinex, Poloniex that a decentralized exchange - Bitshares - has been booming!
Yeah it's a good old tree shake. If Bill Gates says Bitcoin is the future, then it's the future. The head of Paypal has in the next 10 - 15 years they're going to be worth A LOT!
I like the way you think.. I was able to catch the dip and purchase more. I'm just gonna Hodl over here in the corner now.
I think the move here is panic sell guys.
;)