Bitcoin price PLUNGE: Expert explains why cryptocurrency PLUMMETED to new low this year
bitseven.com - BITCOIN price plunged to its lowest value in more than a year this week and cryptocurrency expert Wayne Trench has said a "fairly unique market event" called forking is to blame.
Wayne Trench, CEO of OSL Brokerage, said the sudden drop in the price of bitcoin relates to the so-called “hard fork” of bitcoin cash, whereby the digital asset will effectively divide in two to form a new cryptocurrency. The cryptocurrency expert explained the recent drop in price and said: “If you actually turn the clock back 12 months, bitcoin is actually at almost the same level it was at this time last year.
“It’s really hovered around the $6,200 to $6,500 range and has seen fairly strong support at $6,200. Over the last 36 hours or so, a fairly unique market event with one of the bitcoin cash, or bitcoin cash blockchain, forking.
“Any fork event creates disruption in the marketplace. That’s really been the driver for the price action over the last 24 to 36 hours.”
Mr Trench explained “forking” in the cryptocurrency and said: “This has happened before. The original bitcoin protocol which was established around ten years or so ago was forked a little while ago and a new blockchain, bitcoin cash, was created. At that point in time we saw similar dislocations in the market.
“Investors were keen to try and profit from that trade event and we are seeing something similar play out now.”
Although the price of bitcoin has fallen in recent days, overall BTC’s price has increased dramatically since its creation a decade ago.
Bitcoin economist Saifedean Ammous told Express.co.uk the reason for the rise in BTC’s price was because its supply growth rate is so small.
Dr Ammous argued bitcoin's low supply growth would soon make it the "hardest money on earth" as existing fiat currencies become less desirable.
He said: “That is why in ten years it has appreciated by about 700million percent.”
Since early September, bitcoin had traded in a narrow range between $6,000 (£4,695) and $7,000 (£5,477), following months of steady losses that had seen it fall from a high close to $20,000 (£15,650) in late 2017.
Bitcoin price sat at $5,560.91 at 13:23 (GMT) on Friday, according to CoinDesk.
The cryptocurrency saw its highest value before Christmas when it reached the monumental price of just under $20,000.
Despite the plunge, some experts have anticipated a price surge over the final weeks of 2018, calling the reduced volatility the “calm before the storm”.
Danny Scott, co-founder of crypto exchange CoinCorner, told Express.co.uk bitcoin’s price could reach $15,000 (£11,732) by December.
He said: “If you look at historic trends, November and December typically have been our busier months.
“We are also seeing huge amounts of investment coming through from high net worth individuals and companies buying Bitcoin in high volumes.”
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