The price of Bitcoin has dropped 20% for the past two days running, falling from $9,000 to as low as $4,100. It’s currently back up to $5,400 but it’s changing rapidly.

Such declines are not unheard of in the crypto industry but these large back-to-back losses are fairly rare, even for Bitcoin. So, what caused them?

The wider market decline

The main cause appears to be the crash of the traditional markets. US stocks fell into a bear market on Thursday, as all major indexes fell a further 10%.

“This is obviously a knock-on effect from the sell off we’ve seen on the traditional stock markets, while even so-called safe haven assets like gold have seen their values drop,” eToro analyst Simon Peters said, in a daily email update.

“As governments across the world impose drastic public restrictions to halt the spread of the virus and financial authorities struggle to implement measures to limit the economic impact of COVID -19, investors are clearly feeling overwhelmed with bad news,” he added.

Galaxy Digital founder Mike Novogratz explained that, as a result, investors lost confidence in Bitcoin. “Bitcoin was always a confidence game. All crypto is. And it appears global confidence in just about anything has evaporated. What brings it back to Bitcoin,” he tweeted.

Bitcoin bear Peter Schiff used the decline to argue that Bitcoin was worthless anyway. “With Bitcoin crashing below $4,000 I don't feel so bad about having lost all my Bitcoin. At the rate my lost Bitcoin are losing value soon the difference between having Bitcoin and not having any Bitcoin will be too small to matter,” he tweeted.

Trouble at BitMEX

As usual, when there’s a market crash people look to Bitcoin futures exchange BitMEX. On Wednesday, $750 million was liquidated on BitMEX when the price dropped. In the last 24 hours, $922 million was liquidated, according to data site DataMish.

Some traders argued that, when the price went down, it started triggering all these liquidations, causing further price losses.

When discussing the recent price drop, Blockstream CEO Adam Back told Decrypt, “There were also some other factors like a large long squeeze on BitMEX and other Bitcoin derivative platforms.”

On top of that one lucky Bitcoin miner found an old wallet with 1,000 BTC on it—that he mined in 2010—worth $8 million. While this won't have had a large effect on the market, it seems that he sold it, adding to the downwards pressure.