Bitcoin crashes: Has the bubble burst?

Unfortunately it is looking far from a merry Christmas for cryptocurrency traders.

Overnight the bitcoin price crashed as low as US$10,834 according to CoinDesk. This was a decline of over 45% from its Monday high, leading many to believe the bubble has burst.

At the time of writing the bitcoin price has recovered some of its losses and sits at US$14,032.

Has the bubble burst?

Such was the rush to sell overnight it caused the Coinbase exchange to suspend trading temporarily and futures contracts were halted by CBOE while it waited for the price to stabilise.

In the past few months the bitcoin price has rebounded from sell offs with a move significantly higher, but this time I can’t help but think that it could be different.

Many new crypto traders have only ever known the bitcoin price to go higher. A 45% decline in the matter of days has now revealed the harsh realities of this volatile asset.

Will they be back after Christmas to risk their hard earned money again? Once bitten, twice shy springs to mind.

But it wasn’t just bitcoin that took a tumble. There were heavy declines across all cryptocurrencies including bitcoin cash, ethereum, ripple, and litecoin.

Where next? That’s the million dollar question. But no doubt this isn’t the last we have heard on the bitcoin and its rival cryptocurrencies.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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