The web currency Bitcoin lost over $3 billion in market value in just 40 minutes on Thursday within minutes of hitting all-time high value on Bitcoin Price Index.
On Thursday, the unit broke the USD 1,100 barrier, an average of major exchanges, only to plunge more than 20 per cent in a dramatic correction over next three hours. The drop that broke bitcoin’s continuous rise since 2016 slashed the value of cryptocurrency from $14.6 billion from $17.7 billion, a plunge of about 17.5 per cent.
The price has since recovered somewhat; bitcoin is currently trading around $950, versus $1,100 just before the crash. The current price is around the same level as a week ago, but more than double what it was at this time last year.
Also read | Internet currency Bitcoin nears all-time high as it becomes 'safe haven' asset
Crypto traders have attributed bitcoin’s more general surge to recent devaluation of the yuan—yuan-holders, the theory goes, are turning to the cryptocurrency as a hedge and store of value. That idea gained credence as the yuan rallied over the past 48 hours, while bitcoin fell.
But that yuan rally, triggered by new Chinese capital controls, is likely to be temporary. “[Traders should] see this quick blip as a buying opportunity,” says Harry Yeh at hedge fund Binary Financial. “Expect further upside for bitcoin. Now is the time to buy and hold, because the one thing we are certain of is there will be more uncertainty.”