Bitcoin’s Value Plummeted Overnight and No One Knows Why

Bubbles blow.

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While the Western Hemisphere slept, Bitcoin plummeted.

Just after midnight Eastern Time on Friday, the cryptocurrency was valued at a little over $15,000, on the digital currency exchange Coinbase. At that point, it was already well below the $19,783 all-time high it had hit the week before.

Over the course of the night, Bitcoin began to decline erratically, occasionally spiking but following a general downward trend. Around 9:22 a.m. Eastern, it hit a temporary floor, valued at a mere $10,400. By that point, it had declined more than $6,000 from its short-term peak the morning before, having lost more than one-third of its value.

Screenshot from Coinbase

Bitcoin wasn’t the only currency hit by a sharp drop. Tech Crunch’s Jon Russell reports that most other prominent cryptocurrencies also fell, including Ethereum, Litecoin, and Bitcoin Cash (which is, confusingly, separate from Bitcoin proper). As Russell notes, it’s hard to say why this is happening, “in the same way that nobody knows exactly why bitcoin’s price has [shot] up from a touch under $1,000 at the start of the year.”

Taking a similar stance, Quartz’s John Detrixhe writes, “Looking for reasons to explain bitcoin’s recent drop could be futile.” He points, however, to Coinbase’s claim that it “was investigating insider trading on its platform.” As Aaron Mak explained in Slate on Wednesday, that investigation began when the value of Bitcoin Cash suddenly surged after it was introduced to the exchange, leading some to speculate that traders close to the company (perhaps its own employees) had “stocked up” in advance. Given that no news seems to have emerged on that front, however, it’s not clear how or why it might be connected to the overnight decline.

There is, in any case, good news for cryptocurrency devotees. After its morning low, Bitcoin began to climb again on Coinbase. In the hour after it hit its low point, the currency rose by 25 percent, reaching a value of more than $13,000 by 10:22 a.m. Just as it’s difficult to say why it fell, it’s hard to know why it’s climbing again, whether it will its prior heights, or where it might stop. If nothing else, its earlier descent may offer a warning about the seemingly arbitrary volatility of cryptocurrencies more generally.

Update, Dec. 22, 1:45 p.m.: Coinbase “temporarily disabled” buying and selling for more than two hours Friday because of “high traffic,” but it appears to have been restored.