The prices of Bitcoin, considered as the next-generation payment system and an innovative digital currency, plummeted on June 12, 2017 after it soared exponentially on the previous day. The crashing of Bitcoin prices is largely attributed to the continuous decline in the US technology stocks and accounted for an erosion of about US$500 in value. The downfall was triggered by recent major exchange outage in May this year and the cyberattacks experienced by BTC-e, a major trading exchange. The drop in the shares of key technology companies was imminent as the sector had reached unsustainable levels, contends market analysts.
Bitcoin Prices Decline Knee-Jerk Reaction to its Surging Growth
According to CoinDesk, a leading global site for news and information on digital currencies, including Bitcoin, the cryptocurrency reached a record high of US$3,041.36 level on June 10. This was fueled by news that several key Chinese bitcoin exchanges allowed withdrawals of the currency after a gap of one month. According to the data by CoinDesk, Bitcoin plummeted by over 16% on June 12 to a record low of $2,532.87. The digital currency recovered slightly by trading at $2,721 after 9.00 p.m. on the day. Even with this downfall, Bitcoin retained its growth by being over 150% higher until now for this year.
Several Factors Contribute to Volatility of Cryptocurrency
Several factors reportedly caused the cryptocurrency to tumble. According to Coinbase.com, owing to massive traffic, several customers had to bear the brunt of ‘service unavailable’ notification. The digital asset exchange company accounted for 17% of the U.S. Bitcoin trade volume. Furthermore, BTC-e witnessed distributed denial-of-service (DDoS) attacks. The site was functional only after 4:01 p.m on June 12 and the exchange accounted for 6% of the U.S. bitcoin trade.
On the other hand, with the process reckoned as “initial coin offering”, digital currencies witnessed a surge in funds to support a blockchain-based project. For instance, Bancor, a prominent company smart specializing on developing tokens for blockchain technology, raised nearly US$153 million on June 12. The massive funding for the project still in its infancy has raised concerns among several cryptocurrency experts.