Bitcoin goes down by $3,000 in less than a day, showing its volatility once more.
The world’s most popular cryptocurrency plunged down to $10,000 last Thursday morning, showing a drop of at least $3,000 in less than 24 hours from its previous high of $13,000. The downward movement has been observed to begin during the outage of some popular bitcoin trading platforms last June 27, 2019. While there are so much speculation going around the movement of BTC, the fact that it is up more than 200% in value this year overshadows a slight downward spike.
What happened to Bitcoin?
Bitcoin has shown a strong movement in the past coming months, rallying to a high of $13,485.85 on Wednesday afternoon, its all-year-high from the beginning of the year. However, its value started going down sharply as the U.S. markets closed until it reached a value of roughly around $10,000 by the end of the last trading week of June.
According to Genesis Global Trading CEO Michael Moro, a movement of more than 50% within a single week is much too fast even for the most popularly traded cryptocurrency. He continued to note that one of the biggest factors behind the spike in the price movement is the leverage used by cryptocurrency traders when making trades. Founder of BKCM, Brian Kelly also stated that leverages can contribute to dramatic swings of not just BTC but of any trading instrument. As the prices go up, so did borrowing costs which make prices higher to make a buy position on bullish movement for BTC.
During its 10-year existence in the financial markets, Bitcoin has been known for its high volatility. Its high transaction costs has made it difficult for the market to use it as a payment method. However, traders still see the volatility as a means of making profit, making it a possible profitable trading instrument.