Bitcoin plunged briefly below $11,000 on Friday, down 47 percent from a record high at the start of the week.
CNBC reported that while bitcoin hit a record high above $19,800 on Sunday, and was trading near $15,500 for much of Thursday, an afternoon selloff accelerated into the night. That resulted in bitcoin dropping 30.2 percent Friday morning to a low of $10,400 on Coinbase. It recovered above $14,600 by Friday afternoon, off 27 percent from the all-time high.
“I would say the drop in bitcoin is a result of the massive new inflows of retail investors who are relatively ‘weak hands’ and more prone to sell at the sight of falling prices than the capital that has been in the system for a while that has a longer term outlook,” Alex Sunnarborg, founding partner at cryptofund Tetras Capital, said in an email.
Bitcoin futures also dropped on Friday. The CME bitcoin futures that launched Saturday, which will be expiring in January, reached “limit down,” tumbling almost 20 percent to $12,265 in morning trading before settling at $14,135, which is 7.8 percent lower. And the Cboe bitcoin futures contract, which launched Dec. 10, briefly dropped 21 percent to $12,050.
In addition, bitcoin cash temporarily fell 40 percent Friday to $1,873, after reaching $4,000 two days prior. It recovered to trade near $2,897 in afternoon trading.
Despite the tumble, bitcoin is still up more than 1,300 percent for the year, and bitcoin cash is still up more than 380 percent since it split off from bitcoin on Aug. 1.
“Investors were sitting on such significant gains that a correction was inevitable,” said Benjamin Roberts, co-founder and CEO of Citizen Hex. “These markets are driven in the short term by word-of-mouth adoption and profit-taking, and in the long term by the increasing utility of blockchain tech.”