The price of bitcoin fell as much as $3,300 Thursday as investors took profits following a near-record run that saw the cryptocurrency revisit highs last seen in late 2017.
The price slide started after bitcoin peaked at $13,845.89 a little before 4 p.m. EDT Wednesday, seemingly triggered by outages at two cryptocurrency exchanges.
But it didn’t stop there. Falling through the price points it had broken through in the last week, bitcoin bottomed out at $10,510.49 at 3:30 p.m. EDT Thursday before recovering slightly to $11,108.77 as of 9:55 p.m.
While some in the media are labeling the price drop as some sort of massive crash, it’s more of a cyclical correction, one that has been repeated over and over again since bitcoin started its price climb in March.
The pattern is always the same. Bitcoin hits new yearly highs, then is followed by profit-taking that sees its price fall again such as was the case in April, May, May and early June. The key with each cycle is where bitcoin’s price bottoms following each price spike.
In today’s case, bitcoin bottomed at $10,510, higher than its price on June 23, five days ago. Every up and down is similar: The bottom price is rarely below the prices of a week prior, indicating a cycle, not a repeat of a massive crash circa 2018, at least for the time being.
By percentage, the correction was not particularly notable either. Bitcoin dropped 21% May 19 before once again recovering. Comparing the current peak to its bottom, the drop in bitcoin was around 23%.
One of the other factors in the current price drop may have been the speed of the rally to begin with. “The size and the speed of the rally was unsustainable, and the size and the speed of the correction was even worse,” Jim Iuorio, managing director of TJM Institutional Services, told CNBC. “But what something like that just does is it shakes out the weak hands and reminds people that there’s risk. This is, I hate to say, a healthy movement in something that’s gone as far as it is.”
Others agreed with the contention that the rise was too quick. “It seems the crypto market got a bit too hot yesterday and is now cooling down,” Mati Greenspan, senior market analyst at eToro, said in a note to investors reported by Fortune. “What an incredible market where the price can crash about 15% in less than an hour and bring us back to the highs of the previous trading day.”
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