Following a two month long climb seeing Bitcoin rise from under $1,000 in late March to over $2,700 late last week, Friday and weekend trading activity in the world’s leading digital currency have brought Bitcoin back to earth, just a little, on a wild roller coaster ride of volatility.
After hitting an intraday and all-time high of $2,791 on Thursday, Bitcoin came crashing back down to earth (or at least to the lower stratosphere) to below $2,000, dipping to $1,850 early Saturday – down 34% from Thursday’s high – before U-turning back up again.
As of the time of writing, Bitcoin was back above $2,200 – up 19% in less than 24 hours.
Bitcoin price past 5 days. Source: Bitcoincharts.com.
Bitcoin was bouncing around the $1,000 level for the better part of six months, when it began its latest upward climb in late March, nearly tripling in that period.
Despite the sharp weekend drop, Bitcoin is still well in the green for the month of May, which it began at about $1,400.
This isn’t of course the first Bitcoin price crash, and likely won’t be the last.
So what’s going on with Bitcoin?
Well, it is really hard to say.
Just like there are a number of theories abounding as to why Bitcoin has gone on its two-month tear, the reason for the weekend crash are equally as clouded. It does seem as though Bitcoin traders and investors are playing an increasingly high stakes game of hot potato, with both retail and some institutional players getting in on the action. With the recent rapid rise of Bitcoin, it didn’t take much of a dip on Friday to convince a lot of traders to quickly head for the exits. A combination of profit taking among those who have been along for the April and May ride combined with fear that what goes up fast might come down even faster led to some heavy weekend selling.
As far as the ‘reasons’ for all this? The mainstream reason given is a combination of increasing real-world use, growing acceptance of Bitcoin and its underlying Blockchain technology, buying by Chinese traders looking to hedge and protect against a falling Yuan, and good ol’ speculation by everyone else. Nothing has changed this past weekend, of course, other than fear and profit-taking finally taking hold.
So will Bitcoin continue its correction, or head back up to its near-$2,800 high and even beyond?