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Bitcoin Price Drops by 11% to $30,854 on Thursday, What’s Going On?

Bitcoin Price Drops by 11% to $30,854 on Thursday, What's Going On?

On Thursday, the Bitcoin price dropped to $30,854.70, which was a major dip in price after the world’s most popular crypto broke the $40,000 mark only a week ago. Since then, the BTC price has rebounded and is now hovering above $32,500.

The big question is what’s behind the sudden Bitcoin price drop? There are two reasons:

  1. A report from BitMEX Research claimed a critical flaw in the Bitcoin blockchain was recovered.
  2. JPMorgan analysts called Bitcoin the “least reliable hedge.”

One of those two was debunked quickly. The other claim still remains fiercely debated among crypto enthusiasts. We’re now going to discuss both of the claims that led to the 11% Bitcoin price drop.

BitMex Research Tweets About “Double Spend” Being Discovered in Bitcoin

The so-called “double spend” is a scenario every Bitcoin fan fears – it’s a glitch in the blockchain that leads to spending the same Bitcoin two times.

With a “double spend” happening, the future of Bitcoin would become uncertain. That’s exactly why people started selling it after BitMEX Research tweeted on Wednesday that their systems noticed a “double spend” happening.

This was one of the early problems in blockchain development, but Satoshi Nakamoto’s Bitcoin blockchain dealt with the issue. At least it’s thought so. However, BitMEX’s tweet raised suspicion that the Bitcoin creator might not have done his job thoroughly.

The good news is that the report proved to be false. According to Bitfinex CTO Paolo Ardoino, instead of a “double spend” BitMEX spotted two blocks being mined simultaneously, causing a chain reorganization.

JPMorgan Calls Bitcoin the “Least Reliable Hedge”

The second reason why the Bitcoin price crashed on Thursday is that JPMorgan analysts expressed their opinion on cryptos, which wasn’t too favorable. In fact, they called Bitcoin the ” least reliable hedge during periods of acute market stress.”

As JPMorgan is a respectable name in the world of economics, it’s not surprising that many Bitcoin owners started selling their assets following that statement.

Bitcoin Price Drops, Then Recovers – What’s Next?

This year, we saw Bitcoin breaking many records. Then, this Thursday, its price started plummeting. But, then, it came back. What’s next for the price of Bitcoin?

Some believe Bitcoin could end up dropping to under $20,000, which is where its price stood just a month ago. However, there are also those who believe Bitcoin could go beyond $100,000 in 2021.

Both of these scenarios seem highly unlikely. We probably aren’t going to witness a too extreme price drop for the fact that Bitcoin investing is no longer thought of as a get-rich-quick scheme but a long-term investment.

The reason why Bitcoin price probably isn’t going to skyrocket in the following few months is that the government is probably going to make some big changes in the crypto world. For instance, Janet Yellen, who’s President Joe Biden’s Treasury Secretary nominee, has recently called cryptos “a particular concern.”

According to Yellen, the use of cryptocurrencies for illicit purposes needs to be stopped through government regulations. As a result, this could lead to Bitcoin and other cryptos losing some of their main advantages over traditional payment methods – privacy, anonymity, and security.

If this scenario does play out, the interest in cryptocurrencies is likely to subside. Still, even that probably wouldn’t make the Bitcoin price plummet too much.   

Lee Jenkins

Lee is our resident cryptocurrency expert who knows the ins and outs of each coin and the blockchain technology behind them. You’ll find that most of our technical guides are written or overseen by Lee and they are all easily digestible by the new and experienced alike, so there is no better place to learn blockchain 101 than here. Occasionally you may see a news article from him if it’s tech related!