Bitcoin price fell by more than $1,100 in less than two hours during intraday trading on cryptocurrency exchange Bitfinex.
Bitcoin Price Sheds $1,100 in 80 Minutes
The bitcoin price had already been in decline leading into Tuesday morning, causing it to dip below the $19,000 level shortly before midnight ET. The downward slide continued throughout the morning, and by 5:30 the bitcoin price was trading at $18,401.
Bitcoin shed another $300 over the next hour, at which point it took a precipitous fall. From 6:36 to 6:52, the bitcoin price plunged from $18,144 to $17,255, with most of that movement taking place during a seven-minute firesale.
Since then, the bitcoin price has managed to recover to $17,560 on Bitfinex, nearly $500 below its value on Bitstamp ($17,978) and GDAX ($18,057).
The reason for the bitcoin price’s early morning decline on Bitfinex is not immediately clear, but there are several potential factors.
At least one analyst attributed the sell-off to the breaking news that South Korean exchange Youbit had been hacked and its parent company was filing for bankruptcy. However, Youbit plays a minor role in the South Korean market — much less the global cryptocurrency ecosystem — so its closure should not have a significant effect on the price of bitcoin on Bitfinex. Moreover, the bitcoin price continued to trade near $20,000 on Korean mega-exchange Bithumb, indicating that Korean traders were not overly concerned about the hack.
A more likely scenario is that bitcoin’s early-week decline spooked wealthy investors with weak hands, who determined to take profits following the dramatic market upswing that occurred during the lead-up to the launch of bitcoin futures on CME. The global average bitcoin price has declined approximately $2,000 since CME’s futures began trading on Sunday afternoon, and traders may be concerned that bitcoin will stumble — rather than march — into the new year.
Alternatively, the selloff could be tied to traders attempting to “ride the hot hand” by rebalancing capital to stake stronger positions in the altcoin markets. Ethereum, bitcoin cash, and EOS, for instance, have posted very strong early-week performances, and nearly all top-tier altcoins have made gains against the dollar.