The value of BITCOIN collapsed on Wednesday, causing crypto traders to panic.
The cryptocurrency plunged thousands of dollars within a few minutes early Wednesday morning in what is known as a sudden crash.
It is now trading at around $59,000, down more than $5,000 from the levels it traded earlier this week.
The drop wiped out hundreds of billions from the global cryptocurrency markets.
This drove down the prices of a number of other cryptocurrencies, including Ethereum, Binance Coin, Cardano, Solana, and Ripple.
This comes a week after Bitcoin reached a new all-time high near $67,000.
Today’s crash was caused in part by holders of long-term contracts selling at a high price to take home profits, according to blockchain data. This is typical after the price hike.
However, the recession is expected to lead to a wave of new buyers tempted by the sudden drop in prices.
Bitcoin and other cryptocurrencies have skyrocketed this year. The combined cryptocurrency market is now said to be worth over $2.6 trillion.
Bitcoin alone has added nearly 400 percent to its value since this time last year. However, it has fallen sharply in the past 24 hours.
Earlier this year, analysts warned that the cryptocurrency was still concentrated among a small number of holders.
At the end of 2020, the largest 10,000 bitcoin holders owned about 27 percent of the total 18.6 million coins in circulation.
Researchers at the National Bureau of Economic Research wrote that this makes bitcoin vulnerable to “systemic risk.”
“Despite the huge interest that bitcoin has received over the past few years, the bitcoin ecosystem is still dominated by large and focused players, whether they are major miners, bitcoin holders or exchanges,” they said.
“This inherent focus makes bitcoin vulnerable to systemic risk, and also indicates that the majority of gains from further adoption are likely to fall disproportionately to a small group of participants.”
In other news, cybersecurity enthusiasts are warning crypto enthusiasts of a scam aimed at stealing their Bitcoin from unsuspecting victims.
Cryptocurrency investors panicked last month after the data provider showed a 90 percent drop in the value of bitcoin.
The price of Bitcoin soared in July following allegations that Amazon may start accepting the cryptocurrency as payment by the end of the year.
Nine apps had to be removed from the Google Play Store after they were caught stealing Facebook passwords.
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