Fears now abound that a major crash in the cryptocurrency's price could be underway.
- Bitcoin price drops below $11,000.
- Price is down from $20,000 just a few days ago, a fall of around 45%.
- Fears now abound that a major crash in the cryptocurrency's price could be underway.
LONDON — The price of bitcoin dropped more than $4,600 on Friday sparking fears that a full scale crash of the world's biggest cryptocurrency could be underway.
By 2.20 p.m. GMT (9.2o a.m. ET) the price of a single bitcoin is down almost 30%, or $4,680 to trade below $11,000, as the chart below shows.
That represents a drop of around 45% from its recent high of close to $20,000.
As is often the case with large scale moves in either direction for bitcoin, there doesn't seem to be any obvious catalyst for the sell-off, but given the general lack of liquidity in the market small moves can turn into big ones very fast.
Earlier in the week, bitcoin's price had started to plunge after one of the founders of influential website bitcoin.com announced that he was selling his stake in bitcoin.
Bitcoin does not have any mechanism to halt trading when there are large losses in its value like more traditional markets — these are often known as circuit breakers, and automatically pause trading when assets fall by a set percentage.
As Business Insider Australia's Paul Colgan and David Scutt point out, the day's sell-off has rippled into other major cryptocurrencies:
"The price action appears to be spilling over into other cryptocurrencies, with the second-largest by overall market value, Ethereum, down 26%, and bitcoin spinoff Bitcoin Cash — which was moving in the opposite direction to bitcoin earlier this week — down a whopping 38% in 24 hours, according to Coinmarketcap," target="_blank" they noted a little earlier.
Earlier this week, Dr Garrick Hileman, an economic historian at the University of Cambridge told Business Insider that he believes cryptocurrencies could trigger the next financial crisis if they become a systemic risk to the financial system.