On Friday, cryptocurrencies plunged sharply. Sudden selling caused bitcoin to plummet to a three week low.
Bitcoin dropped 7.7% to $21,404 in a matter of minutes during the European morning at 0640 GMT. The bitcoin price fell slightly, but it continued to fall and trade at around $21,400 at 1138 GMT. That’s 8.2% less than the previous day.
Ether dropped at the same time, and was last seen 8.8% lower at $1,685.
It is not known why the drop occurred.
“It’s not a flash crash pattern, since the assets didn’t immediately rebound sharply, but plummeted even further in the hours that followed,” stated Susannah Streeter (senior investment and markets analyst, Hargreaves Lansdown).
“It appears likely that this was due to a large-scale sale transaction.”
Streeter stated that it seemed the cryptocurrency cardano was the first to move, followed closely by bitcoin and Ethereum, and then other altcoins such as the dogecoin.
As investors abandon riskier assets, cryptocurrencies have seen a dramatic fall in value this year due to Federal Reserve rate increases and high inflation.
Craig Erlam is a senior market analyst at Oanda. He said that bitcoin’s inability to recover its losses “implies there is substance to this move”.
These sharp moves are not uncommon in volatile markets like the cryptocurrency market. Bitcoin plunged over 15% on June 15th after investors became alarmed by TerraUSD, a stablecoin that was crashing, and major crypto lender which had frozen customer withdrawals.
Bitcoin’s worst day since June’s meltdown was set for Friday with the move of Friday.
Streeter, Hargreaves Lansdown, stated that “speculating in cryptocurrency is extremely risky and is not suitable to the vast majority of people.”