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Bitcoin Plummets to $8,500 a Day Ahead of the Halving

May 11, 2020 at 10:52 by Matt Jackson

Bitcoin’s price has slumped to $8,500, falling to $8,100 in early Sunday trading, having failed to break major resistance at $10,000. The crash saw Bitcoin shed all of its weekly gains in just a few minutes, and caused major exchange Coinbase to lose service for around an hour, despite the exchange not seeing any spike in activity. Other exchanges managed to continue uninterrupted trading. Meanwhile, Bitcoin transaction fees rocketed 300% on May 8th, ahead of the halving when transaction prices could increase further.

Bitcoin opened trading last week at $8,900 and traded at around this level until Wednesday, May 6. It climbed over the next few days, reaching $10,000 on May 8. The world’s largest cryptocurrency looked set to tackle $10,000 resistance and approached this level several times over the weekend. However, it came unstuck in Sunday trading, briefly climbing to $9,800 before crashing to $8,400 in 30 challenging minutes. The digital gold slumped as low as $8,100 on some exchanges and eradicated the whole week’s gains, bringing 7 successive weeks of green to a halt. The price has steadied off just short of $8,700. The crash saw cryptocurrency’s total market capitalization fall from $265 billion to $235 billion.

The crash took the rest of the cryptocurrency market with it. Ethereum is now back trading at $185 having reached $215 over the weekend. Ripple fell from $0.22 to its current price of $0.194. Bitcoin Cash and Bitcoin SV also saw similar drops, falling from $265 to $230 and from $210 to $187 respectively. Bitcoin SV has continued its decline, falling further to $180.

The weekend fall led to major exchange, Coinbase, losing service for approximately an hour. The outage came despite, according to Coinbase, no obvious spike in usage, and despite the fact that other major exchanges managed to retain a stable service. Coinbase outages are commonplace when price volatility is high, although this is usually accredited to a marked increase in trading volume.

Meanwhile, Bitcoin transaction fees have rocketed in the lead up to the third halving event. Transaction fees, which are determined by demand, had fallen as low as $1.80 per Bitcoin, last week. However, this figure rose to a high of $3.19 on May 8th. Fees have dropped a little since this time and it now costs just over $2.90 to send Bitcoin. This follows a similar trend that occurred in April, when transaction fees rose by nearly 700% in anticipation of the halving. Transaction fees are expected to rise after the event because the mining reward will be cut in half, which means that fewer miners will be verifying transactions as it becomes less profitable to do so. A reduction in supply means that the price should go up. Traders will be hoping to avoid the $55 transaction fees of December 2017.

The market is still heavily divided over the likely direction of Bitcoin price movements following the halving. Some expect a considerable price increase in the 12 months following the event, but many believe that because the event was expected and there is some historical data to support claims, that the price increase has already been accounted for in the current rates. There are even some that expect a crash following the halving, although data suggests that miners are prepared to hold on to their rewards at least for the foreseeable future. Investors don’t have long to wait to find out what happens, as the halving occurs in approximately 9 hours.

Bitcoin (BTC) is down 3.32% and now trading at $8,525.45 while Ethereum (ETH) is down by 3.03% and costs $185.41. Ripple (XRP) has shed 3.37% from its price, to trade at $0.193. Bitcoin Cash (BCH) and Bitcoin SV (BSV) are both down, falling by 3.13% and 6.54% to trade at $229.94 and $178.45 respectively.

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