Bitcoin price: This one chart shows just how volatile Bitcoin and cryptocurrency can be

Vaughn Highfield September 5, 2017

What a rollercoaster of a week it’s been for the Bitcoin price.

Bitcoin price: This one chart shows just how volatile Bitcoin and cryptocurrency can be

In just a single day, the cryptocurrency reached the dizzy, record-breaking heights of $17,100 (£12,700), plummeted to (albeit, a still impressive) $14,450, surged back up to $16,300 before dropping to $14,900 and finishing on $15,300.

The hype is so high that Coinbase, an app that helps you buy Bitcoin, jumped straight to the top of Apple’s US App Store. It’s unusual to see an app climb so high in such a short space of time, but the fact it’s an app related to a relatively niche topic such as cryptocurrency is indicative of how far-reaching it has become.

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At these levels, Bitcoin’s market cap is hovering around the quite staggering amount of $258 billion. To put this into perspective, the cryptocurrency began the year at less than $1,000 per coin making its surge a meteoric one.

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However, the rise hasn’t gone by without a hitch and there have been some significant slumps (in some cases seeing hundreds knocked off the price) in just a matter of hours over the past 12 months. And of course, the bigger the bubble, the higher the likelihood it will burst. In September, after Bitcoin soared beyond the then recording-breaking $5,000, the cryptocurrency dropped by more 16% from its peak.

This also followed the collapse of Bitcoin2X. Set up to be like Bitcoin Cash, which was intended to be a “fork” off of the original Bitcoin blockchain, Bitcoin 2X was a new cryptocurrency created from the original Bitcoin blockchain and Bitcoin technology. Seeing as the price of Bitcoin is skyrocketing as more people started to use it, being able to process larger transactions quickly, instead of splitting them across lots of blocks, is a boon but security issues make it difficult.

The fragile Bitcoin market

In September, China outlawed initial coin offerings (ICOs) stating that they have “seriously disrupted the economic and financial order”. As part of this, China also ordered all ICOs to return funds to investors, creating instability around how much both Bitcoin and Etherum is worth when smaller ICO tokens are reconverted back. A drop in the market can always be expected after a government strikes out against a cryptocurrency, but China’s actions are likely to have a greater effect due to the number of cryptocurrency exchanges based there.

More recently, the UK Treasury announced plans to crack down on cryptocurrencies, including Bitcoin, to prevent them being used for criminal means, tax evasion, terrorism and money laundering. In particular, the Treasury’s plans align with a wider EU iniatitive to bring transparency to virtual currency exchanges.

Under the plans, online platforms would be forced to “carry out due diligence on customers” and report suspicious transactions.

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Ironically, the market is also fragile because of the growth of public interest in Bitcoin and Ethereum, following the fork of the Bitcoin blockchain, destabilising the market. An influx of spending saw the price of Bitcoin and other cryptocurrencies inflate in September, and the market was forced to readjust as it began to cool and settle once more. This has the potential to happen again, but on a larger scale because of the more dramatic rise.

The threat is so real that you can now get advanced warnings about an impending crash using Bitcoin Bubble Burst, unveiled at TechCrunch’s Disrupt Berlin hackathon. It uses AI to look for trading patterns and news reports — such as today’s Treasury crackdown – to warn investors and subscribers before a slump occurs.

Image: Stock image/Coin Market Cap