June 28, 2022

Bitcoin plummets $20 billion in second bizarre price crash

2 min read

The price of bitcoin has fallen to a six-month low following the second major crash in the space of just three days.

The latest dip in value took bitcoin below $7,000 (£5,400), wiping nearly $20 billion from its overall market capitalisation since this time last week.

Its price remains well up from the start of the year, when it was trading at below $4,000, but is now worth half as much as it was in June.

Friday’s flash crash was attributed to current market uncertainty that has forced some investors to reassess their holdings in cryptocurrency assets.

Such uncertainty has been fuelled by recent developments in China, where authorities are undertaking a fresh crackdown on unauthorised cryptocurrency exchanges in the country.

Cryptocurrency analysts pointed to another mass sell-off after the latest drop, which saw around $100 million liquidated into fiat currency overnight.

“Worse could be on the cards for the cryptocurrency if it sees an expected ‘Death Cross’,” Simon Peters, a bitcoin specialist at the online trading platform eToro, told The Independent.

The so-called Death Cross is a market pattern that occurs when the 50-day moving average falls below the 200-day moving average. Dropping below that level is usually an indication that bitcoin will suffer even heavier losses.

Mr Peters noted that on both occasions when this previously happened, bitcoin fell by more than 60 per cent in value and dragged other cryptocurrencies like ethereum and ripple down with it.

Both ethereum and ripple have already suffered significant losses over the last few days, dropping by 16 per cent and 11 per cent respectively.

Bitcoin cash, a spin-off of its more famous namesake, has also dropped by around 13 per cent.

Some experts claim the downward market movement could actually signal an imminent rebound.

“We essentially went from $5,000 to $13,500 in three months and now, like the swing of a pendulum, the market wants to know where the bottom price is,” George McDonaugh, CEO of blockchain investment firm KR1, told The Independent.

“In my opinion, we are in the early stages of a bull market. The bottom this time will be much higher than $5,000 and we will find higher lows all the way back to all-time highs.”