Cryptomoney markets have undergone a sharp correction in the last few hours.
Bitcoin (BTC) and Ether (ETH) in particular have deviated to levels they had not reached for several weeks. This morning we take stock of what has triggered investor fears.
Bitcoin (BTC) below $29,000 and Ether (ETH) at $1,000 – What happened last night?
Bitcoin (BTC) drops below $29,000 again
The trend has been downward for the price of Bitcoin Future since the beginning of the week, but its fall accelerated overnight. Yesterday morning, it was still just over $35,000, but it gradually fell during the day, before hitting its low tonight at $28,850:
BTC Bitcoin price
In total, the price of Bitcoin has lost -18% in the space of 24 hours. It has since started to recover, and is trading this morning for 31,700 dollars. However, its capitalization has fallen back below 600 billion dollars.
Altcoins, including Ether (ETH), are following the trend.
Altcoins accompanied the fall of the greatest cryptomony, to varying degrees. The fall of ETH was brutal, since it lost -23% over the same period. But it should be noted that its good progression of the last few days allows it to limit the fall to -3.4% over the week, where the BTC falls by -18%. After hitting $1,000 early this morning, the Ether managed to climb back above $1,100.
Polkadot (DOT) is the Altcoin of the top 10 that is doing the best over 24 hours, losing only -1%. For Bitcoin Cash (BCH), at -11%, it’s another story, and Cardano (ADA) is not much better, at -10%. Litecoin (LTC) and Chainlink (LINK) are trying to save furniture, with -4% and -6% respectively.
What happened to Bitcoin and Altcoins?
Note that this fall could correspond to two events. On the one hand, the comments of Janet Yellen, the new US Treasury Secretary, who made some criticisms against cryptomoney, explaining :
„Cryptomoney can be used to finance terrorism and facilitate money laundering. I think we need to look at how we can encourage their use for legitimate activities while reducing their use for illegal activities. »
Second, and perhaps the biggest factor, the fall also took place in the midst of a wind of uncertainty. A major crypto media outlet raised the mayonnaise about a possible „double spending“ on the Bitcoin network. In reality, as analyst Andreas Antonopoulos explained, what happened is very common on the Bitcoin blockchain.
Again, all of this is normal. A 1-block reorganization happens every couple of weeks on average as a consequence of decentralized PoW.
„All this is normal, a reorganization of 1 block occurs every two to three weeks on average, it is the consequence of the decentralized Proof-of-Work. A two-block reorganization occurs less often, perhaps a few times a year. »
As also explained by the media Bloomberg :
„The blockchain itself has never been corrupted. …] Confirmation of transactions via multiple blocks is a Bitcoin asset, not a bug. »
FUD everywhere, quiet nowhere
But the damage had already been done, and the courses were unsettled. Several voices were raised to comment on this blitz correction, and they themselves propagated a certain FUD. JPMorgan considers that Bitcoin (BTC) could be seen as a cyclical asset because it would be „the least reliable bulwark in times of market stress“.
In any case, all of this shows that Bitcoin is subject to investor panic… and that investors are not always very rational.