Bitcoin's value recovers after falling by third
22 December 2017, 15:23
Some investors have questioned their stakes as Bitcoin plummeted by a third to around $11,000 (£8,200) in a few hours - before staging a recovery.
This is not a new phenomenon for experienced Bitcoin owners, but amateur investors may be concerned.
A typo in a Bitcoin forum regarding the proper way for the faithful to react to volatility has resulted in the community's restatement of the value of "hodling" (holding) out during value drops.
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Sky's Ian King said: "What I would say here is that it is absolutely no surprise to see this spectacular reverse in Bitcoin. Following a 20-fold increase in value since the beginning of the year it was inevitable that there would be some sort of correction at some point.
"Many traders will have profited handsomely from the rise and so will be looking to lock in some of those profits before the end of the year.
"It may also be possible that some money is being switched from bitcoin to other cryptocurrencies in the hope of profiting from increases there too.
"The second and third largest cryptocurrencies, Ethereum and Ripple, have been the beneficiaries of this - both have risen sharply this week."
Neil Wilson, senior market analyst at ETX Capital, said: "Has the bubble finally popped? It's hard to see the bell tolling just yet. Large price swings have become so normal that it's hard to decide - we can easily see this market bounce back in very short order."
Bitcoin is still much higher than in October when it first hit the $5,000 (£3,750) mark.
"Whilst there have been some hacks, public infighting in the mining community, lots of rumoured forks and regulatory pressure building on some fronts, this is likely to be a simple bout of risk-off selling as investors rebalance towards year-end," said Mr Wilson.
As the World Coin Index image chart below shows, the volume of Bitcoin transactions has not grown at a similar pace to Bitcoin's value - suggesting that many of those buying it are speculating on its value rather than using the currency to buy goods.
(c) Sky News 2017: Bitcoin's value recovers after falling by third