Early on Wednesday, Sept. 5, cryptocurrencies experience a sharp drop in value, alarming investors and experts alike. According to Business Insider, around 5:50 a.m. EST, Bitcoin, which was valued at $7,350 in the early hours of the east coast trading day, lost more than $200 in value in a matter of minutes, and within an hour dipped below the “psychologically significant” $7,000 mark. Bitcoin’s value drop also brought down the value of other cryptocurrencies, like ethereum, ripple, and bitcoin cash.
Experts aren’t sure what caused the sudden drop in value, though some attribute it to “panic selling.” One crypto writer, Tanya Abrosimova, said that the drop could be attributed to attempts to regulate the global crypto market, which may have spooked investors.
As of now, Bitcoin is once again trading above the $7,000 mark. This number is considered the threshold at which the crypto market stabilizes—anything below a $7,000 valuation will likely lead to a bear market, or, a market marked by massive sell-offs and precipitous drops in value. For crypto investors, this is unwelcome news after a summer of relative stability—particularly owing to the fact that, after an all-time high valuation at just shy of $20,000 in December, Bitcoin’s value has yo-yoed for months.
According to The Independent, this drop shouldn’t come as a surprise. Matthew Newton, a market analyst, told the publication, “Bitcoin’s price might be rising but it’s way too early to call this a true resurgence… Traders should be cautious.”