The price of bitcoin has crashed dramatically, losing more than 10 percent of its value in the space of just a few hours. Several other cryptocurrencies also suffered heavy losses, including ether, XRP (ripple) and bitcoin cash.
The sudden drop comes after months of sustained price growth, which saw the cryptocurrency rise from below $7,000 at the start of the year to above $10,000 by late February.
Coinbase CEO Brian Armstrong has just taken to Twitter to reveal that BTC did the opposite of what he expected during the global market turmoil.
It is a rather rare occasion when the CEO of the biggest exchange in the U.S. comments about the price of Bitcoin. However, some prominent members of the cryptocurrency community, including Blockstream CEO Adam Back, were not thrilled by his take given that he only singled out only the big orange coin.
While it’s clear that Bitcoin calls the tune in the cryptocurrency market (it is responsible for 64 percent of its total market capitalization), Armstrong’s tweet was perceived as an attempt to depict BTC in a bad light.
Some analysts attributed bitcoin’s price rise to geopolitical turmoil at the start of the year, compounded by the coronavirus outbreak that has now seen more than 110,000 confirmed cases around the world.
The theory that moments of global crisis and uncertainty actually boost the price of cryptocurrency is unproven, though some claim it has become a safe-haven asset for investors when traditional markets are wobbling.
The latest crash appears to dispel this narrative, as it coincided with the sharpest rise in coronavirus-related deaths since the outbreak began. It was also in line with the UK’s FTSE 100 share index, which fell by 8 percent on Monday in one of the worst single drops since the 2008 financial crisis.
“The dramatic loss in value mirrored the falls in equities as well as oil, with the main markets reacting to further negative news about the coronavirus,” said Marcus Swanepoel, CEO of London-based cryptocurrency firm Luno.
“The question for cryptocurrencies is where next. Market analysts had been predicting a price correction in the coins and if this is part of this process we may see buyers coming back to the sector.
“If this is a deeper sell-off linked to the coronavirus then we could see trading in line with the main markets.”