After a tumultuous week for bitcoin, it nears the end of the year with another unexpected surprise: a 25 percent decrease in value. The cryptocurrency plunged to $10,834 Friday, according to Coindesk data — nearly one-third of its value from the day before. On Sunday, bitcoin peaked at $20,000, its highest value to date.
It’s unclear what exactly has caused the massive plunge in the last 24 hours, but it may have something to do with the erratic week it’s had. On Dec. 19, Coinbase, a U.S.-based exchange, was under scrutiny for alleged insider trading for Bitcoin Cash— a currency which spun off of bitcoin. The Securities and Exchange Commission (SEC) suspended trading of The Crypto Company until Jan. 3. And Youbit, a South Korea cryptocurrency exchange, announced it was closing its doors after digital robbers stole an undisclosed number of Bitcoins. The exchange was hacked for the first time in April, when an estimated 4,000 Bitcoins were stolen.
In the past month, Bitcoin reached its highest value ever, and the the Chicago Board of Exchange and the Chicago Mercantile Exchange announced it would allow futures trading in Bitcoin. All of this chaos comes after Bitcoin has truly stepped into the mainstream spotlight, quite literally being the topic in athlete locker-room talk.
Friday's big dip has not gone unnoticed in the bitcoin community though. Many have taken to Twitter to publicize their freak-outs, or lack thereof.
According to some active veterans in the bitcoin community, a plunge like this is nothing new — which may not reassure many:
However, this may be only further validation that Bitcoin is indeed a fragile bubble, and an unsustainable currency whose end is nearing totality — it's a theory that some experts have warned about. In November, Nobel Prize-winning economist Joseph Stiglitz provided his two cents on the cryptocurrency in an interview with Bloomberg news, saying, "It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down.”
It’s worth noting that in December 2016, Bitcoin had also experienced an unprecedented high, peaking at around $900.
Perhaps this end-of-the-year wrap-up is one of those exciting times. Or people are just trying to cash out before 2018. Regardless of the reason, its drastic and inconsistent behavior seems to be the definition of an economic bubble.