Bitcoin’s Double-Digit Loss Has Investors Searching for Answers

After crashing to its lowest level in over 12 months, bitcoin is showing little signs of recovery Thursday. The 24-hour price ticker continues to show double-digit percentage losses as volumes on virtual exchanges surged.

BTC/USD Update

Bitcoin continues to vary markedly across exchanges, with Coinbase reporting a price-per-coin of $5,439. The San Francisco-based exchange quoted a BTC price of $5,391 earlier in the session.

On Bitfinex, the BTC/USD exchange rate is currently seen hovering just below $5,650. The exchange quoted a daily high of $5,940.

Bitcoin’s average price is reported to be $5,532 on CoinMarketCap, a decline of 12% over the past 24 hours.  Trade volumes across all exchanges surged to $8.3 billion as investors rushed to liquidate their positions.

At the time of writing, virtually all major cryptocurrencies were nursing significant losses with the overall market cap situated below $182 billion. Bitcoin and the broader market are showing little signs of recovery for the time being as investors continue to process Wednesday’s brutal drop.

No Clear Catalyst

There doesn’t appear to be a single known catalyst for the violent market-wide drop experienced on Wednesday. Although volatility in the market was observed prior to the decline, most notably for bitcoin cash and in the rival ABC/SV futures, there was no single event that caused the market to capitulate.

As Hacked previously reported, bitcoin usually exhibits weakness following prolonged periods of narrow trading ranges. A failure to break out of those ranges often invites a wave of selling pressure in subsequent weeks followed by a recovery later on. As a whole, this cycle has kept the bitcoin price elevated above $6,200 in the latter half of the year but upside remained firmly capped below $6,800-$7,000. It was only a few days ago that bitcoin’s 30-day volatility index fell to more than two-year lows.

Although manipulation cannot be ruled out, it’s possible that the latest drop reflects technical re-positioning in the market. It’s also possible that bitcoin cash’s “civil war” had an oversized impact on the broader market as investors await the outcome of the highly contentious software upgrade.

Despite these concerns, bitcoin’s fundamental picture has improved significantly this year as institutions continue to take aim at cryptocurrency. Intercontinental Exchange is set to launch its Bakkt trading platform next month, which offers institutional traders the opportunity to trade physically-backed bitcoin futures products. Meanwhile, VanEck has expressed confidence that its physically-backed bitcoin ETF will gain regulatory approval at some point in the future. The general consensus appears to be that an ETF is coming eventually but not likely in the near term. The U.S. Securities and Exchange Commission is set to deliver a verdict by Dec. 29.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi