For months, the price of Bitcoin has been around the average level of $ 6,000. Not anymore. The most popular cryptocurrency collapsed by 12% in the last day, reaching just over $ 5,500.
The total market capitalization for Bitcoin now amounts to $ 96 billion – the first time that market capitalization has fallen below $ 100 billion since October last year. The total market capitalization for the entire cryptocurrency scene now amounts to $ 181 billion.
Bitcoin is far from the only victim, with the cryptocurrency price charts all firmly in red at this time. XRP (Ripple), the second largest virtual currency, is down 9.2%, Ethereum & # 39; s Ether is down nearly 13% and Bitcoin Cash is down by 8.7%.
So, volatility is back, but, as often happens, it's not entirely clear why this is so.
A theory, touted by BKCM founder Brian Kelly on CNBC, is that the incident was caused by disagreements on a "fork" in Bitcoin Cash.
The hard forks are those in which a major software update happens on a cryptocurrency, essentially creating a new cryptocurrency (with free coins for existing coin holders) leaving the old one intact – here's how Bitcoin Cash was formed in the first place, and now He's still doing it. There is no majority agreement in the Bitcoin Cash community about which is the best version, though.
On Wednesday, the head of the IMF Christine Lagarde also made headline news asking more countries to explore the potential of digital currencies, but the digital currencies supported by the central bank, not the Bitcoin-style cryptocurrencies.
Some countries like Sweden, China and Canada are already exploring this idea, with a key driver that is keeping the safety of consumers using currency. There is a possibility that, if such schemes come to fruition, they could encourage regulators to crack down on competing cryptocurrencies that do not offer such protections.