The incredible bitcoin adventure has continued in the last day or so, as the highly volatile cryptocurrency reached yet another record high before falling heavily.
Things kicked off when bitcoin began another of its now familiar price surges. This charge led it to an all-time high of $11,434 (£8,500) shortly after it had smashed through the $11,000 barrier for the first ever time, amidst record levels of traffic.
The price then began to drop like a stone, as bitcoin fell below $11,000 followed by $10,000. It fell as far as $9,009 (£6,697) before recovering some ground. At the time of writing it sits at $9,982 (£7,420), which was pretty much where it was before this latest roller-coaster ride began.
The price plunge in the middle of all this activity seemed to affect some exchanges more than others, with a service outage at GDAX pointed out as being a possible factor. Service outages at Bitstamp and Gemini had also caused problems during this period.
Of course, while 2017 has been a year of massive increases in the price of bitcoin, it has also seen a number of sharp drops as well. Indeed, several times it has fallen by at least a quarter this year.
Differing Points of View
Among the analysts to express a view on this matter, Leigh Drogen from Estimize said that there is “no fundamental value” to any of the cryptocurrencies, so the price movements are simply down to “supply and demand at any point in time”. He also said that “one of the most difficult markets to trade” because of the high levels of volatility.
Another point of view came from Jonathan Krinsky, who is the chief market technician at MKM Partners. He said that the big swings make “somewhat of an inflection point” and commented that the huge gain in recent times mean that “it’s not surprising to see some consolidation”.
It has also been pointed out that the total market capitalisation of bitcoin is currently under $200 million. With $200 trillion invested in the more conventional financial markets, it is easy to imagine how the movement of some of this money into the virtual currency could make a huge difference.
Among those who feel that bitcoin is going to carry on rising in price is former hedge fund manager Mike Novgratz. He recently said that the currency could reach $40,000 (£29,714) by the end of next year and called digital currencies “the biggest bubble of our lifetimes”.
While bitcoin was rising, falling and then rising again, other popular currencies were losing ground. For instance, in ethereum trading the ether currency lost close to 14% off its record high when it fell back to $448 (£333).
Bitcoin cash also suffered a loss, although this was fairly modest. This bitcoin off-shoot lost 5% when it dropped back to $1,466 (£1088).
Fundstrat technical strategist Richard Sluymer told CNBC that “high volume, high volatility intra-day reversals like today” are often a warning shot that advises of a “potential trend shift” when they follow on from strong rises.