As people digest the volatile price movements in both the stock market and in Bitcoin it is fair to say that the days of unpredictability have returned.
Bitcoin has not seen such wild movements, since the boom of 2017. Back then, the price was skyrocketing as news spread of the pumping price. This led to a new influx of retail investors pushing the price higher until the bubble popped.
Since then Bitcoin has behaved in a much more stable manner. There have definitely been substantial price swings but nothing on the scale of what happened yesterday.
Contagion effect
The conditions currently could not be more different than 2017. As the world continues to deal with a pandemic, predicting what will happen next to Bitcoin has become even more difficult.
Many technical analysts of Bitcoin charts will find their patterns invalidate to begin with. Added to this, is the wider uncertainty in traditional markets and how it could cause a contagion effect for the more illiquid cryptocurrencies.
Between 02:16 and 02:40 UTC 13 March 2020 we became aware of a hardware issue with our cloud service provider causing BitMEX requests to be delayed. Normal service resumed at 03:00 UTC. As a reminder, latest system updates can be found on our status page https://t.co/fVa1FAqSEW
— BitMEX (@BitMEX) March 13, 2020
Overnight exchanges appeared to buckle under the pressure of what was occurring. Not since 2017 have exchanges seen such drama. Back then, they restricted new sign ups in an effort not to overload their servers. This time, the situation was the opposite. Bitmex, one of the largest exchanges, had to enter maintenance as the price continued to plummet.
Bitcoin in uncharted territory
During such volatile times the best thing people can do is not panic. Emotions run high and emotions can lead to poor decision making.
As the world continues to get to grips with the pandemic, it is impossible to know what will happen next with Bitcoin. Caution is the name of the game.
No doubt there will be vastly differing opinions on Twitter as to what will happen next but ultimately, no one really knows.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.