Bitcoin Price Crash

The price of bitcoin has crashed dramatically, losing more than 10 per cent of its value in the space of just a few hours.

Several other cryptocurrencies also suffered heavy losses, including ether (ethereum), XRP and bitcoin cash.

The sudden drop comes after months of sustained price growth, which saw the cryptocurrency rise from below $7,000 at the start of the year to above $10,000 by late February.

Some analysts attributed bitcoin's price rise to geopolitical turmoil at the start of the year, compounded by the coronavirus outbreak that has now seen more than 110,000 confirmed cases around the world.

The theory that moments of global crisis and uncertainty actually boost the price of cryptocurrency is unproven, though some claim it has become a safe-haven asset for investors when traditional markets are wobbling.

Satoshi Nakamoto creates the first bitcoin block in 2009
The latest crash appears to dispel this narrative, as it coincided with the sharpest rise in coronavirus-related deaths since the outbreak began.

It was also in line with the UK's FTSE 100 share index, which fell by 8 per cent on Monday in one of the worst single drops since the 2008 financial crisis.

"The dramatic loss in value mirrored the falls in equities as well as oil, with the main markets reacting to further negative news about the coronavirus," said Marcus Swanepoel, CEO of London-based cryptocurrency firm Luno.

"The question for cryptocurrencies is where next. Market analysts had been predicting a price correction in the coins and if this is part of this process we may see buyers coming back to the sector.

"If this is a deeper sell off linked to the coronavirus then we could see trading in line with the main markets."

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