The crypto has quickly plunged into a sudden crash, dragging all the other big players with it, just a week after hitting an all-time high.
Bitcoin's value plummeted on Thursday, causing cryptocurrency traders to panic.
The cryptocurrency dropped thousands of dollars in just a few minutes in what is known as a flash crash.
On Thursday, it was trading around $ 58,000, more than $ 6,000 below the levels it was trading at earlier this week.
The crash has wiped out hundreds of billions from the global cryptocurrency markets.
It has caused a drop in the prices of several other cryptocurrencies, including Ethereum, Binance Coin, Cardano, Solana, and Ripple.
It comes a week after Bitcoin hit a new all-time high of near $ 67,000.
However, on Friday, Bitcoin rose marginally, by three percent, to $ 60,000.
What caused the drop in the price of Bitcoin?
The drop is driven in part by long-term holders selling at a high price to take home the profits, according to blockchain data. That's typical after a price hike.
But it also coincided with a request from finance company Direxion for a new bitcoin exchange-traded fund (ETF) that would bet against the future price of crypto.
It will be called Direxion Bitcoin Strategy Bear ETF, according to its filing with the United States Securities and Exchange Commission.
The app comes just a week after the SEC allowed the first bitcoin futures ETF, the ProShares Bitcoin Strategy ETF, to go public.
The approval of that ETF helped send the price of bitcoin to its latest all-time high, as analysts said the new ETF would help broaden investor exposure to cryptocurrencies and make the sector more mainstream.
The mid-week drop is expected to trigger a wave of new buyers tempted by the sudden drop in price.
In fact, El Salvador's President Nayib Bukele tweeted that his government had "bought the drop," adding an additional 420 BTC to the treasury, at a cost of $ 25 million.
Coindesk wrote: "That buy was one of the reasons behind today's (Friday) price rebound."
Experts have pinned Bitcoin to hit $ 61,000 soon.
The prices of Bitcoin and other cryptocurrencies have exploded this year. Now the combined cryptocurrency market is said to be worth more than $ 2.6 trillion.
Bitcoin has only added nearly 400 percent to its value since this time last year. However, it has been drastically reduced in the last 24 hours.
Earlier this year, analysts warned that the cryptocurrency remains concentrated among a small number of holders.
At the end of 2020, the 10,000 largest bitcoin holders had around 27 percent of the total 18.6 million coins in circulation.
This makes Bitcoin susceptible to "systemic risk," researchers from the National Bureau of Economic Research. wrote.
"Despite the significant attention that bitcoin has received in recent years, the bitcoin ecosystem is still dominated by large and concentrated players, whether they are large miners, bitcoin holders or exchanges," they said.
"This inherent concentration makes Bitcoin susceptible to systemic risk and also implies that most of the gains from increased adoption likely fall disproportionately to a small group of participants."
This articleoriginally appeared on The Sun and was reproduced with permission.
