Bitcoin plunged 5.5per cent to US$53,435.9 at 22:04 GMT on Friday, losing US$3,112.06 from its previous close.
Bitcoin is down 22.6per cent from the year’s high of US$69,000 on November 10th.
Bitcoin’s price is renowned for being highly volatile, but despite that, it has become the top cryptocurrency of any class (including stocks, commodities and bonds) over the past decade, climbing a staggering 9,000,000% between 2010 and 2020.
However, the price volatility of Bitcoin has left many skeptics questioning the mathematical and economic basis of price movements while searching for a generalized justification of its valuation.
Because of its decentralized nature, Bitcoin doesn’t follow the monetary policy of governments, and Bitcoin is not backed by any underlying asset or government. This creates skepticism among investors and consumers who appreciate the price stability signals a fiat currency enjoys from government policy and support.
Another pivotal event on Bitcoin’s blockchain is the halving. It induces inflation in the cryptocurrency’s price by reducing the number of bitcoin in circulation and increasing demand for Bitcoin.
Bitcoin halving has implications for all stakeholders within Bitcoin’s ecosystem. Every 210,000 blocks, or about once every four years, the number of bitcoin received from each block reward is halved to gradually reduce the number of bitcoin entering the space over time. As of 2021, miners receive 6.25 bitcoins each time they mine a new block.
The other prominent crypto, Ether, the coin linked to the Ethereum blockchain network, also dropped 6.81per cent to US$4,208.68 on Friday, losing US$307.35 from its previous close.
