Bitcoin price: is the market heading for a ‘perfect storm’?
Low interest from investors could spell trouble for online crypto traders
Bitcoin’s turbulent summer has been followed by an equally rocky autumn - and it could have major repercussions on the cryptocurrency industry as a whole.
The virtual coin made continual gains throughout the first half of the year, rising from a low of $3,400 (£2,600) in January before peaking at around $13,800 (£10,700) in June, according to ranking site CoinMarketCap.
But values quickly tumbled in July, slumping to $9,500 (£7,380) until falling a further $1,100 (£855) by the beginning of October, the ranking site notes. As of 2pm UK time today, bitcoin was trading at $8,000 (£6,210).
The market’s immediate future looks bleak, too, with trading news site U.Today claiming that investors are bracing for values to drop towards the $6,000 (£4,660) mark.
Is a “perfect storm” brewing?
Quite possibly. Not only have bitcoin values slumped in recent weeks, but trading volumes - the amount of bitcoin traded in a given period - are down to less than $200m (£155m) per day, a “20-fold” drop on the $4bn (£3.1bn) per day peak recorded a few months ago, says Forbes.
Low trading volumes and stagnated bitcoin values could mean the industry is headed for a “perfect storm”, the news site says. This is because cryptocurrency trading platforms rely on regular trades to make money, as they charge users a small fee for each transaction.
When cryptocurrency values begin to decline over extended periods of time, trading volumes tend to follow suit. The knock-on effect is that trading platforms “get into trouble” as they make less money, which puts pressure on the “nascent” industry, Forbes adds.
Mati Greenspan, a senior analyst at online trading platform eToro, described the state of the market in a tweet as “dismal”.
However, he conceded that bitcoin is “one of the best performing assets this year”.
“After all this action a period of stabilisation is more than welcome,” said Greenspan on Twitter. “Bitcoin is not dead. It’s just resting.”