Omkar Godbole
The over-6% drop saw the top cryptocurrency by market value register its biggest single-day decline in two weeks, according to CoinDesk’s Bitcoin Price Index. Prices briefly hit lows near $9,100, a level last seen on May 27.
There’s three likely factors as to why this happened:
Stock market sell-off
Global equities cratered and traditional safe havens like U.S. government bonds and the Japanese yen gained value as comments by the U.S. Federal Reserve that the economy may take years to recover gave a reality check to investors hoping for a V-shaped recovery.
Bitcoin initially showed resilience by holding above $9,700 during the Asian and European trading hours. However, the sell-off in U.S. equities was too big to ignore for the crypto market traders – some of whom likely offered bitcoin on the fear that financial markets could be about to witness another round of panic like that seen in March.
The Dow Jones Industrial Average (DJIA) fell by 1,800 points on Thursday, reviving memories of multiple 1000 point drops seen during the first half of March.
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A few observers had warned of an impending price drop in conversation with CoinDesk during Thursday’s European trading hours. At that time, bitcoin was trading near $9,800.
“A switch to ‘risk-off’ in global markets could lead to further downside pressure for major cryptocurrencies,” Matthew Dibb, co-founder of Stack, a provider of cryptocurrency trackers and index funds, told CoinDesk.
Dump fears
Big on-chain transactions, especially ones related to controversial wallets and addresses, can create panic in the cryptocurrency markets. That’s because, in the past, malicious entities have liquidated stolen coins in the market, causing sudden price declines.
On Thursday, hackers moved over 400 BTC (or $4.1 million worth of cryptocurrency) stolen from the cryptocurrency exchange Bitfinex to unknown wallets, according to twitter bot Whale Alert.
These transfers happened in 20 transactions during the Asian hours and were noted by the crypto market community. A few investors then began speculating about a price dump. At that time, bitcoin was hovering around $9,900.
https://www.coindesk.com/why-bitcoin-price-suddenly-dropped-thursday-crypto