Bitcoin prices fluctuated near the $95,000 point on the evening of Thursday, December 26, after shedding approximately 5% of its price in less than 24 hours.
The world’s largest virtual currency fell to just $95,083. 93 today, according to Coinbase data from TradingView.
The cryptocurrency fell to this point after approaching $99,900 on Christmas Day, more Coinbase figures from TradingView reveal.
As a result, the digital asset depreciated roughly 4.8% in a matter of hours.
After dropping to this level, Bitcoin recovered a bit, but it was still trading between $95,000 and $96,000 at the time of writing.
In explaining the cryptocurrency’s recent decline, analysts have pointed to several causal factors.
One development that market observers emphasized repeatedly was low trading volume, which made it easier for bitcoin to experience more exaggerated price movements.
“With Christmas and New Year’s falling right in the middle of two consecutive weeks this year, markets are expecting longer-than-usual low holiday volume,” Tim Enneking, managing partner at Psalion, said in emailed comments.
“The low volume leads to greater volatility, since smaller orders can have a huge impact,” he said.
Lackluster business activity turns out to be a typical occurrence this time of year, according to Alex Lin, co-founder and general spouse of venture capital company Reforge, who described it as a “common occurrence” thanks to emailed comments.
In this low-volume trading environment, several market observers have pointed out that an obvious malfunction in TradingView is contributing to Bitcoin’s recent decline.
The situation, which Cointelegraph reported on earlier, resulted in the website temporarily stating that bitcoin dominance, meaning its share of the total cryptocurrency market, fell to zero.
Marc P. Bernegger, cofounder of crypto fund of funds AltAlpha Digital, commented on this situation via email.
“The latest swings in Bitcoin’s value from nearly $100,000 to around $95,000 appear to have been influenced by a factor in TradingView,” he said.
“This error falsely showed Bitcoin’s domain in 0%, which generated panic between investors and the next market volatility. This led to significant settlements, with approximately 33 million dollars in Bitcoins liquidated in a few hours, ”Bernegger added.
Lin also spoke about this development.
“There is also a premature challenge on TradingView where the Bitcoin dominance indicator fell by 0%, which may have prompted more outflows,” he said.
“So the panic selling from the technical error into a low liquidity environment, amplified by strategic profit-taking after a relatively positive year and major institutional movements of $338mn in BTC ETF outflows on Christmas Eve are the most likely catalysts for the retreat in the last 24 hours,” the analyst added.
George Kailas, CEO of Prospero.ai, offered a different perspective on what caused bitcoin’s recent price declines, choosing to focus on a short list of factors.
“I think what we see here are two things,” he said by email, the first is “a herbal correction in an asset that has evolved as temporarily up as we can wait for it to move. “
“To that end, one of the reasons I believe these swings are so wild is the disjointed nature of policy expectations without policy,” he stated, helping flesh out his views on the subject.
“There has been a huge run on the expectation of an American president more friendly to Crypto than any we’ve seen by far,” said Kailas.
“But those are just expectations, although there is an expectation that policies will be cryptocurrency friendly, the policies do not exist yet,” he noted.
“Therefore, there must first be a certain probability that certain promises will not be fulfilled,” the analyst stressed.
“And also, it will be complicated for the market to discover what value is an intelligent value to have an effect on these policies when they are promulgated. “
“But at least when it comes to policies as opposed to political expectations, the market can actually perceive them rather than degrees of speculation,” he said.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.