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Abu Dhabi, UAEFriday 26 February 2021

Bitcoin's 10% drop over the weekend pushes it below $10,000

Largest cryptocurrency is experiencing increased volatility before 'halving'

Bitcoin is seeing volatility in price as it slips below $10,000 on Sunday. AFP 
Bitcoin is seeing volatility in price as it slips below $10,000 on Sunday. AFP 

Bitcoin slumped over the weekend after rising back above $10,000 late last week.

The largest cryptocurrency fell 10 per cent on Sunday according to Bitstamp pricing, its biggest one-day drop since March 12. It has dropped 13 per cent from Friday and traded at $8,669 as of 7:45am in Hong Kong, according to composite pricing on Bloomberg.

The volatility in Bitcoin comes in a week when a halving is expected, an event that happens about every four years and slows down the rate at which new tokens are created – an intentional feature designed to control inflation.

Bitcoin has rallied in anticipation from around $6,000 just a month ago.

Bitcoin has already undergone two halvings – or halvenings, as they’re sometimes called – that caused its price to appreciate.

The world’s largest token rose from around $12 to over $1,000 in the year after its 2012 cut in rewards, and advanced about 1,000 per cent after the 2016 halving, though that reduction happened at a time when the coin was gaining greater mainstream recognition.

The frenzy around digital currencies took it to near $20,000 the following year before it crashed, with the coin still trading at about 50 per cent below 2017’s highs.

The third such event is set to occur sometime next week when the number of blocks hits 630,000.

Sceptics argue that cryptocurrency prices are notoriously volatile and often difficult to pin explanations to, positing that any appreciation should be priced in ahead of time. But cryptocurrency fans cite precedent.

Updated: May 12, 2020 05:03 AM

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