Bitcoin Price Suffers Biggest Daily Drop in History

After reaching all-time high after all-time high, Bitcoin’s price was in dire need of a correction. 

“Bitcoin’s parabolic rise is unsustainable in the near term. Vulnerable to setback,” tweeted Scott Minerd, global chief investment officer at investment giant Guggenheim Partners, at about 5am UTC on Monday morning, as Bitcoin’s price began to fall. 

He wasn’t wrong.

Over the last 24 hours, Bitcoin’s price fell $9,000, hitting a low of $32,000. At one point, its price fell $3,000 in under two hours. This extreme price volatility upturned a lot of futures traders, liquidating $1.1 billion in long positions. And in real dollar terms, today’s losses represent the biggest Bitcoin crash ever. But what caused this sudden downturn? And what will happen next?

A sudden market correction

Price corrections have simply been part and parcel of bull runs in the past, and today’s price action is no different.

“This Bitcoin price drop should not seem unusual to anybody who has been following the space since the 2017 boom,” Dmitrii Ushakov, chief commercial officer at BitRiver, told Decrypt. 

During 2017’s Christmas bull run, Bitcoin reached what was then an all-time high. On the way, we saw dips similar to what has happened today. For example, between November 9, 2017 and November 13, 2017, Bitcoin’s price dropped 20% between $7,459 and $5,950. 

Jason Deane, Bitcoin analyst at Quantum Economics, told Decrypt that price corrections are “a healthy part of a bull market and allow traders to regroup and catch their breath before embarking on new price discovery,” 

Deane added that, “In times of emotionally fuelled trading, like the 2017/18 boom, these corrections can be large and unpredictable.”

But knowing that price corrections happen hasn’t stopped some Bitcoin holders from selling their assets. 

Small investors selling their Bitcoin

Despite many in the crypto industry calling for calm, Bitcoin’s decreasing price has led to small holders selling off their Bitcoin. 

This can be explained, in part, by small holders searching for short-term profit, or cutting their losses before witnessing what they might expect to be an even greater market crash. 

“Profit-taking once Bitcoin passed $40,000 triggered small investors who are, understandably, more prone to panic (and excitement) and resort to selling faster,” Antoni Trenchev, co-founder and managing partner of Nexo, told Decrypt. 

Kain Warick, founder at derivatives liquidity protocol Synthetix, addressed those who might be looking to sell their Bitcoin for fear of a greater price drop in the near future. 

Bitcoin Custodian Bakkt Will Go Public at $2.1 Billion Valuation

Bitcoin custodian Bakkt will become a publicly traded company, according to an announcement today. The company will be valued at $2.1 billion. Bakkt is merging with VPC Impact Acquisition Holdings in a deal that will result in a combined company called Bakkt Holdings, which will be listed on the New York Stock Exchange. The company also stated that it is already working with Starbucks to enable customers to reload their Starbucks Cards. Bakkt currently supports over 30 loyalty program sponsors...

Early this morning, he tweeted, “The key takeaway here is that if you are a new entrant to the market or you have been here for a while don’t be spooked by a -10% daily candle,” adding, “While we all carry a little PTSD from late the 2018 capitulation, it is important not to overreact to intraday moves, or even intraweek.” 

While smaller Bitcoin holders might be more prone to react to the market, those holding large amounts of Bitcoin are more willing to hold on to their assets in the long term. 

Large investors remain calm

This price correction might have troubled smaller investors but those holding larger amounts of Bitcoin have are less likely to sell their holdings. 

The FCA Has 5 Entirely Reasonable Concerns About Cryptocurrency

The UK Financial Conduct Authority (FCA) issued a consumer warning about the risks of investing in cryptocurrency today. But it wasn’t scaremongering, instead, it was an acknowledgment of the risks that do exist in the industry. In its warning, the FCA listed five main risks and concerns associated with “high-return investments based on cryptoassets,” including consumer protection, price volatility, product complexity, charges and fees, and marketing materials. Ok, so these are the bullet point...

According to protocol specialist Elias Simon, accounts with over 1,000 Bitcoin continue to grow. 

Elias Simos, protocol specialist at node infrastructure provider Bison Trails, tweeted, “While you were selling, whales were gobbling up your Bitcoin.” 

They’re now getting a hefty discount too.