Early on Thursday, Bitcoin dropped to its all-time low, trading at $10,373.75. The world’s first and most widely-traded currency has a reputation for volatility since its 10-year inception and had rallied to $13,485.85 less than 24 hours earlier on Wednesday, its highest since January 2018. However, it fell nearly 3,000 points shortly after.
The sharp drop occurred at roughly the same time as Coinbase, another popular cryptocurrency trading platform, had an outage that was blamed on a high volume of visitors.
Genesis Global Trading CEO, Michael Moro, said: “Even the most optimistic crypto bulls would tell you that a 50%-plus move in a week is too much too fast.”
Moro and other analysts blamed leveraging, a move where investors borrow money to make a trade, as a key instrument behind the volatility. Increased borrowing means increased payback and higher trading. The higher transaction costs of Bitcoin is likely what’s prevented it from being the everyday payment method some hoped it would be. It’s become more of what many consider to be digital gold. Many experts say the cryptocurrency is being used as a hedge against rising global tension and trade war threats.
There have been doubts in the past, though, when Bitcoin ended by more than 73 percent lower last year.
Facebook recently announced its own cryptocurrency project, Libra. Since then Bitcoin has rallied almost 30 percent. Some analysts believe Facebook’s announcement has increased awareness of cryptocurrency and has created more interest from serious investors who’ve taken note that one of the world’s largest companies is investing in the digital asset class.
Overall, Bitcoin is up by more than 200 percent in 2019 but isn’t anywhere near the all-time high near $20,000 that was reached in late 2017.