Bitcoin investors are braced for a rough ride after the bitcoin price crashed by almost 10% over the last 24-hour trading period.
The bitcoin price, which had been holding its ground since a supply shock earlier this month, has suddenly moved sharply lower—dropping under $9,000 per bitcoin.
Bitcoin fell to lows of $8,928 on the Luxembourg-based Bitstamp cryptocurrency exchange before rebounding slightly.
The wider bitcoin and cryptocurrency market recorded similar declines, with most major tokens losing between 5% and 10% and wiping more than $10 billion from the total crypto market value.
The cause for the sell-off was not immediately clear, although the market appeared to be spooked by old bitcoin tokens worth some $500,000 moving for the first time in years.
“While it is unclear if it was [bitcoin’s mysterious creator] Satoshi Nakamoto, it is likely to be a very early-stage adopter of the crypto-asset, and the timing of the rumours themselves appear to be the source of yesterday’s flash crash,” eToro market analyst Adam Vettese wrote in a note to clients.
The bitcoin price lost almost $500 in a matter of minutes on Wednesday afternoon as news of the decade-old bitcoin transaction spread.
Bitcoin’s earliest adopters are potentially sitting on millions of bitcoin, many of which haven’t moved since they were first created.
If these so-called whales begin selling their bitcoin it could potentially flood the market, causing prices to plummet.
Meanwhile, bitcoin technical data is painting a mixed picture with one widely-respected analyst, Quantum Economics’ founder Mati Greenspan, warning the bitcoin price could be about to fall a lot further.
“We’re now sitting at the top of a long standing wide range, the bottom of which could easily be $6,000 or even $4,000 per bitcoin,” Greenspan wrote in a note, adding he thinks there’s “a fair chance” of the market turning around and “blasting through $10,000” per bitcoin.
Bitcoin’s solid performance since its third supply cut, known as a halving, has taken bitcoin investors by surprise—many of which expected there to be extreme volatility following the highly-anticipated event.
Earlier this month, the number of bitcoin rewarded to those that maintain the bitcoin network, called miners, was cut by half, dropping from 12.5 bitcoin to 6.25.
Some had warned the bitcoin price could crash in the aftermath of the third halving but most analysts seem confident the bitcoin price will climb eventually.
“The potential for bitcoin as an alternative hedging tool will only continue to grow,” Lennard Neo, head of research at Singapore-based institutional-grade bitcoin index fund Stack, wrote in a weekly analysis update that found “short-term expectations of a huge potential drawdown have partially abated.”
“As bitcoin’s investment attributes become more prevalent, we expect to see a growing number of investors tactically allocating it to their portfolios in both the near and long term.”