The price of Bitcoin fell 10 percent over the course of 48 hours, erasing more than $100 billion from the total cryptocurrency market.
The value of the largest digital currency had been climbing to record highs in recent weeks, but its price fell to as low as $31,310 on Thursday, according to industry website Coindesk. The cause of the slump isn’t yet clear, but some experts believe it may be due to natural correction.
“Corrections are a natural part of any market and are especially natural in the bitcoin ecosystem,” Michael Sonnenshein, CEO of Grayscale Investments, told CNBC. “From 2016-2017, we experienced 6 corrections of approximately 30% or more on the way to new highs.”
Earlier this month, the notoriously volatile currency fell close to 22 percent from one day to the next. That plunge came on the heels of major upward momentum seen over the last 12 months.
Bitcoin’s value surged in 2020, in part due to the belief held by some that Bitcoin offers a store value similar to gold during times of economic turmoil. However, Bitcoin has previously soared to all-time highs only to take a massive nosedive. In December 2017, the coin’s value rose to nearly $20,000 before falling sharply the following year.
Some analysts believe the coin may be poised for a similar plunge, while others remain bullish and argue that “corrections” are to be expected.
“Who’s to say whether we’ve seen the bottom of the correction, but at Grayscale we know that there continues to be a flurry of demand, especially from institutional investors who have longer term holding preferences,” Sonnenshein said.