On Friday, cryptocurrency prices dropped significantly, with abrupt selling pushing bitcoin to a three-week low. Analysts disagreed on the cause of the drop.
Around 0640 GMT throughout the European morning, Bitcoin dropped as much as 7.7% to $21,404 in a short period of time. At 1651 GMT, it had somewhat recovered to trade around $21,528, down 8.05% from the previous day.
At $1,721, ether was recently down 8.32%.
In a research report, Marcus Sotiriou, an analyst at the digital asset broker GlobalBlock, stated that it didn’t seem like there was a single event that caused the massive selling.
However, he added, “the S&P 500’s rejection and failure to extend its rebound contributed to bitcoin’s loss.” By early Friday afternoon, the S&P 500 had lost almost 1% of its value.
The shift, according to Susannah Streeter, senior investing and markets analyst at Hargreaves Lansdown, was “the result of a significant sale transaction.”
“It’s not showing the pattern of a flash crash,” the analyst claimed, “since the assets didn’t instantly bounce sharply but dropped further lower in the hours that followed.”
According to Streeter, it appeared that the cryptocurrency Cardano had moved first, then bitcoin and ether, and finally more coins like the altcoin dogecoin.
Since the start of the year, cryptocurrency prices have plummeted drastically as investors have fled riskier investments due to Federal Reserve rate increases and extremely high inflation.
Bitcoin’s failure to recoup its losses, according to senior market analyst Craig Erlam of Oanda, “suggests there is substance to the move.”
These abrupt changes are typical of the extremely volatile bitcoin sector. On June 15, bitcoin fell more than 15% as a result of investors becoming alarmed about TerraUSD’s demise. And the blocking of customer withdrawals by a prominent cryptocurrency lender.
Due to the move on Friday, bitcoin is on pace to have its worst day since the crash in June.
According to Hargreaves Lansdown’s Streeter, “speculating in cryptocurrencies is extremely high risk and is not fit for the great majority of people.”