The value of the cryptocurrency Bitcoin dipped under $6,000 today as part of a massive sell-off, with prices plunging to depths not seen since May last year.
According to CoinDesk’s Bitcoin Price Index, the price of the digital money—the world’s largest cryptocurrency by market capitalization—rapidly sank by over 20 percent from roughly $8,000 to under $5,700 this morning, but showed signs of picking up after climbing back to reach just over $6,100.
Financial tracking charts largely spoke for themselves, with Bitcoin’s price trajectory seen taking a nose dive between 10:30 a.m. (UTC) and midday.
The sell-off appeared to have been sparked by the COVID-19 outbreak alongside wider turmoil experienced in the traditional financial stock markets, Bloomberg reported.
Similar movements were recorded across other popular cryptocurrencies, with statistics from CoinMarketCap showing Ethereum, Ripple, and Litecoin pricing also negatively affected. Fears spiked in recent days about the potential scope of economic damage caused by the ongoing spread of novel coronavirus.
“There has been a general move to cash and Bitcoin has been hit particularly hard,” Charles Hayter, CEO and founder of price tracking service CryptoCompare, told Newsweek.
“We are seeing more than 11000 trades per second across the [cryptocurrency] ecosystem, with blockchain data showing some intense movements across the onchain environment,” Hayter continued. “Clearly the macroeconomic backdrop of fear and panic is driving this move.”
The unexpected shift in crypto pricing comes as the global stock markets reacted to President Donald Trump’s announcement yesterday that travel between the U.S. and Europe would be restricted.
CNBC reported today those plans failed to restore confidence in investors, with the S&P 500 trading down more than seven percent. London’s FTSE 100 index today dipped by more than five percent, the BBC reported. Stock performance this week has been the worst since the 2008 financial crisis.
“To keep new cases from entering our shores, we will be suspending all travel from Europe to the United States for the next 30 days,” Trump said yesterday during an Oval Office address.
The president added, “[America’s] vast economic prosperity gives us flexibility, reserves, and resources to handle any threat that comes our way. This is not a financial crisis, this is just a temporary moment of time that we will overcome together as a nation and as a world.”
Today, social media reaction to the Bitcoin price plunge was immediate.
“Want to know what the stock market would look like without down limits and circuit breakers and closing bells? Go look at bitcoin right now,” journalist Paul Vigna commented. “That’s a bitcoin crash they will be talking about for years to come,” tweeted cryptocurrency trader and investor Bob Loukas.
“And that’s it. The very-long-term Bitcoin trendline is gone, finished, kaput,” tweeted financial investor and author Glen Goodman. “The fundamental set-up was…#COVID19 , obvs.”
The cryptocurrency space has always been notoriously volatile and illiquid, with market speculation, hype, or bad press shifting prices wildly. In 2017, Bitcoin enjoyed a major boom. Its value increased to nearly $20,000. But it was a bubble which burst the following year.
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