Bitcoin – Volatility works both ways

Bitcoin rises fast and falls hard

We’re getting an early reminder today that bitcoins extreme volatility works both ways, with the cryptocurrency tumbling more than 10% and extending it’s losses since peaking yesterday to almost 20%.

The sudden plunge has been widely attributed to another crash, that of Coinbase, the US crypto trading platform. Perhaps this was just a convenient opportunity to lock in some profits or maybe it’s a reminder just how influential one exchange is and therefore how sensitive prices are to these kinds of outages. Maybe both of these are true but it will be interesting to see just how quickly prices recover.

This is a wild market and I wouldn’t be surprised if bitcoin ends the day in the green. Even if it doesn’t, the coming days will likely be no less eventful which usually means large moves. Today strikes me as more of a setback than a game-changer, we only briefly traded below yesterday’s open, that doesn’t suggest to me that traders are completely panicking yet.

That said, one thing that’s always been clear about bitcoin is that it’s very unpredictable, especially during it’s most volatile periods. I expect this will be no different.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.