Bitcoin Crashes Under $13,000, as Bubble Burst Scare Grows
Bitcoin prices nosedived by more than $2,500 yesterday as investors made a run for their money after the cryptocurrency’s fourth day of decline just before Christmas as the frenzy surrounding virtual currencies experienced one of its toughest litmus tests yet.
The world’s biggest electronic money dipped below the $13,000 mark prior to recovering to near $14,000 late in the European session as other key digital money also took a beating, with Bitcoin Cash dropping over 30 percent and Ethereum shedding more than 20 percent in the last 24 hours, coinmarketcap.com reported.
These significant drop losses indicate a huge test for the digital cash market and the blockchain technology that it is hinged on.
Analysts on the Bear market are quick to question the value of digital assets, with UBS Group AG calling bitcoin the “biggest speculative bubble of all time.” On the other hand, Bulls are of the opinion that technology is a game-changer for finance and investment. Both bears and bulls will keep a tight watch on the upcoming results of the current selloff.
The not-so-surprising plunge comes following a series of caution by market observers as well as governments regarding a bubble that could explode at any given time as investors, a huge number of which are inexperienced, joined the bandwagon in hopes of reaping some huge monetary gains.
Feeling the pressure
Market investors who purchased bitcoin on futures exchanges through collateral may begin facing margin calls after the price drop. Two venues rolled out products in the past weeks that required huge security, with Cboe requiring 44 percent to clear contracts, and the CME 47 percent. Brokers set safety nets even higher.
According to analysts, without an ounce of doubt, digital currency enthusiasts who got in on margin will face some pressure … the volumes were not huge, so it will not be a huge price driver, but for those found themselves on the wrong side the drop will hurt.”
Bitcoin retreated to $12,191 from $16,563 as of Thursday. It plunged nearly 40 percent from its record high of $19,500 as of Monday, based on a report by Bloomberg.