On Sunday, June 10, 2018, the price of bitcoin and almost all cryptocurrencies fell sharply. Bitcoin was pushed down $1,000 from $7,600 to $6,600 with other tokens also taking a 10% to 20% hit. Although cryptocurrencies are traded 24 hours a day, 7 days a week, the volume is noticeably lower at the weekends. Weekend trading generally sees less volatility, but low volumes can move the market sharply under the right conditions.
Prices had been falling steadily since early May when bitcoin traded at around $10,020. Some pundits expected prices to fall further, but at $7,600, others expected to see the price rise. Whenever the price of bitcoin goes below $8,000, there are always speculative calls that it could fall to record lows for the year in the range $1,000 to $5,000. Very few traders believe bitcoin will drop below $5,000, but some of their technical analysis charts suggest it is at least possible.
Even the bears that were expecting prices to fall were caught off guard with the speed of the decline. In the first couple of hours of the day (UK time), the price of bitcoin fell around $300, and it fell a further $450 at 6 PM. Throughout the day it lost a further $250, culminating with a one-day loss of $1,000.
What caused the price of bitcoin to fall?
Whenever the price of bitcoin moves sharply up or down, crypto traders feverishly check their charts to see why they were taken by surprise. Crypto traders can only work from their charts and general market sentiment, but prices can be affected by many external factors. During the day news broke that a fairly minor exchange in South Korea, Coinrail, was hacked. This alone was probably not enough to push the price down to $1,000, especially as there were two major declines during the day. It could have been that Asia reacted to the news first, and then later in the day, America marked the price down further.
Some pundits have suggested that an article dated June 8, 2018, relating to subpoenas issued to four exchanges lead to the heavy fall. The U.S. CFTC is suggesting that some crypto exchanges might be manipulating the futures price of bitcoin. Subpoenas, requesting trading data, were sent out to Kraken, Coinbase, itBit, and Bitstamp. As the article was published by the WSJ almost two days before bitcoin dipped lower, the effect is likely to have been marginal. The exchange hack, combined with low weekend trading volume and overactive trading bots was probably the cause for the crypto deep dive.
Financial analyst, smartphone app designer, technical writer, and crypto enthusiast. Blockchain verified graduate of MOOC 9, DFIN-511: Introduction to Digital Currencies, run by the University of Nicosia.