Bitcoin has lost almost 20% in less than two weeks, proving that extreme volatility remains a hallmark of crypto investing.
Yet in the world of bitcoin, it’s largely business as usual with bullish conviction intact — in contrast to traditional markets where moves on this scale are met with alarm. The largest cryptocurrency slipped 0.5% to about $57,280 in early London trading on Friday, a sixth day of declines.
“Bitcoin correction is not a big deal,” wrote Craig Erlam, senior market analyst at Oanda. While a break to $50,000 “would represent a large correction from the highs, it would still be relatively minor considering how far it’s come in recent months.”
Some analysts say a sharp pullback is normal after prices skyrocketed 40% in October. China’s crypto crackdown and new US tax-reporting provisions that are being viewed as unfriendly to crypto investors have also soured sentiment.
“During the 2016/17 bitcoin winter, the thing that really took the wind out of the sails of crypto was when interest rates rose and liquidity was draining from the system,” said Jamie Cox, a financial adviser and managing partner at Harris Financial Group.
Price swings of 20% or more aren’t uncommon among cryptocurrencies. After hitting a record of almost $65,000 in early April, bitcoin slumped more than 50% by late June before turning higher again. After hitting nearly $53,000 in early September, it retreated about 25% over the next couple of weeks.