This weekend was pretty bad for Bitcoin owners, as the price plummeted and it hit $620 today. Experts have different explanations for the significant price drop, some have named the latest round of negotiations between miners and developers, whereas others have pointed to the recent surge in the value of Etherum Classic might have something to do with the Bitcoin price drop.
It is still more likely that the meetings between the miners and developers is the key reason. And it turns out that Lily Allen might have overstated Bitcoin’s stability, but Bitcoin investors are used to the volatility and rapid price changes. Despite the decrease, there’s no need to panic as decrease might be only temporary.
Market Cap Falls under $10 Billion
For the first time in quite a while the market cap dropped below $10 billion. However, the $10 billion market cap threshold is just a psychological one and it has no bearing on the further movement of the price.
The price remained pretty stable during Saturday varying between $650 and $655 but on Sunday there was quite a steep fall and at one point it was even as low as $618 and earlier today it was as low as $615. The available supply is pretty stable at 15,787,644 BTC.
The interesting fact is that the traded volume in the last 24 hours exceeds $110 million, i.e. it is exactly $111 million. That can be attributed to the fact that a lot of people were quick to sell once they saw how rapidly the price falls, whereas the buyers had been pretty convinced that the fall is only short-term.
That is one of the indicators that the price might stabilise and go above $630 initially and then reach $650. However, if we see a drop below $600, we’re likely to expect further downfalls.
The Price Drops during Every Meeting
In the past few months there were several meetings between Bitcoin Core developers and mining pool operators where the size of the block that is supposed to be issued was discussed. It has already been registered that whenever there is such a meeting the Bitcoin price drops.
That had been the case this time as well as the fall of the price coincides with the time of the meeting. These meetings are always held behind closed doors and no journalists are allowed. That’s why it has been speculated that it is this uncertainty that drives the price down.
It has been reported that more than 20 people were present at the latest meeting. Some believed that the Lightning Network might have the answer to the issue, but other are more reluctant and don’t want to wait for half a year or even a full year before a solution is reached. We’ll need to wait and see whether Chinese miners are the answer to the problem, as it was suggested few weeks ago.
It has also been mentioned, in the wake of the price fall, that some Bitcoin users are blaming Ethereum for the price drop and linked it to the fact that a founder of the Digital Currency Group and of the Bitcoin Investment Trust publically announced that he bought Etherum Classic.
However, whether or not he is right about Etherum Classic, it seems that the public statement has nothing to do with the decline of the Bitcoin price. Etherum Classic is extremely volatile and its price is still very low for it to have any impact on Bitcoin.