From $7,850 to $5,850- Bitcoin’s wild weekend explained

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Bitcoin, over the course of the weekend, fell as much as 29% and rose back up on Monday in what is regarded to as a wild 72-hour market frenzy. What is going on here?

 

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Charts Don’t Lie

Source: Bloomberg

From the chart above, it can be seen that Bitcoin was trading at a record high of ~$7,850 before it crashed 29%, exchanging for ~$5,850 at the start of business on Monday.

Why?

Cancellation of SegWit2x update to be blamed

The huge drop is as a result of the weekend's selling frenzy after developers called off plans to implement the SegWit2x upgrade to the bitcoin network. The proposal was an attempt to improve bitcoin's transaction speed and cost, deemed a necessary upgrade before Bitcoin gets any bigger. However, developers decided to call off the upgrade which is planned on November 16th; after it failed to get the necessary support from miners and other important members of the community.

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The short rise of Bitcoin’s other alternatives

Other Bitcoin alternatives – Bitcoin Cash and Bitcoin Gold appear to be the major winners of this massive drop. After the huge Bitcoin’s sell-off, investors picked up these two for a change. After chalking up gains, the two cryptocurrencies plunged back as everyone seems to be heading back to Bitcoin.

Huge swings not for the faint-hearted

One thing is for sure: this huge swing is not for the faint-hearted. If it was happening in the stock market, trading would have been halted to prevent further damage from happening. There's usually is ‘damage control’ system in place, to prevent panic from setting in.

With Bitcoin, technically it is not so. While exchanges can halt trading, users can still make transactions by sending Bitcoin straight to their addresses. 

Imagine if everyone were to dump their stocks freely in the open market. There would be mass panic selling everywhere and the price would be more severe after the bears are being set loose.

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More rough rides ahead for Bitcoin

If there’s anything to be learned in 2017, it is that Bitcoin is on an uptrend. But could there be a bubble waiting for it somewhere down the road? In the meantime, investors should just prepare themselves physically and mentally for a tough ride; as we haven't seen the last of these huge swings.  

And remember not to put all your investments in one basket, as Bitcoin’s volatility is there for everyone to see.

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Eza EzamieEza Ezamie
Category: Team WhaTechCompany profile: Tech junkie by profession and passionate about anything from the digital world, movies, games and reading. He loves writing and hopes you enjoy his writing as much as he does. Eza, is also known as Don in the virtual world, but don’t him me wrong, he's not a mafia type he's really a nice chap and a devout family guy.