The price of Bitcoin has been moving within the range above $6,000 during the last two weeks. However, on Wednesday, November 14, the rate fell to the year low at 5,523 dollars. The cryptocurrency has lost about 13% of its value in less than five hours. The total market capitalization also fell below $100 billion for the first time since November last year and is currently at the level of slightly above $76 billion. On Tuesday, November 20, the price dropped to $4,500.
The dip of Bitcoin had a domino effect on crypto markets. The five largest cryptocurrencies also fell by more than 10%, and the market cap fell below $200 billion. Bitcoin Cash, which was forked on November 15, was the biggest misfit, quickly losing 15% of its value.
There is no consensus among experts regarding the causes of price collapse. Tanooj Luthra, co-founder of the network, which consolidates transactions on Ethereum, pointed to two events that occurred at the same time with the crypto market collapse.
The first event was Bitcoin futures expiration. The second possible reason for the fall of cryptocurrency market is the fork of Bitcoin Cash, which was divided into Bitcoin ABC and Bitcoin SV.
Luthra says that the fork can lead to a shift in mining resources, because both cryptocurrencies use the same algorithm of launching new coins. If the price of one of these two (Bitcoin ABC and Bitcoin SV) rises, it becomes more efficient for miners to start mining more valuable coins. Mining is an important factor in determining the availability and trading of cryptocurrencies in the markets. Despite the sharp drop in prices, Luthra is optimistic about cryptocurrency markets. This year it is much more realistic to use the actual profitability of cryptocurrencies.
Another expert, Chris Burniske, the author of a book on cryptoactive assets, rejects the BCH fork reason for the fall. He believes that this is not relevant for the price of Bitcoin. Derek Urben, CFO & Director of Business Development at Coinigy, a cloud-based trading platform, agrees with this view and says that Bitcoin has another opportunity to fall by the end of this year. According to him, the Network Value to Metcalfe ratio (NVM), which is used to value bitcoin based on growth in its network, is not “supportive” of bitcoin’s current price.