The price of Bitcoin, the largest and most well-known cryptocurrency in the world, fell sharply over the weekend, moving to the lowest levels of the last three weeks.
Infamous for its extremely sharp fluctuations, Bitcoin plunged 13% from a record high of about $64.000 per unit, dropping to $52.000 at the end of last week. The cryptocurrency showed signs of recovery on Monday, with its valuation hovering around $56.000.
The sudden drop in the value of Bitcoin was recorded in the aftermath of the rapid rise that led the cryptocurrency to a record high last week, as Coinbase Global Inc. had just entered the Nasdaq stock index.
Other cryptocurrencies, such as Ether and Dogecoin, were also affected by the sharp jump in Bitcoin valuation, which had also hit record highs in recent days.
Although the reasons for the decline have not been fully clarified, it is speculated that the rumoured tightening of controls by major US financial institutions on cases of money laundering through cryptocurrencies may have provoked a chain reaction in the market.
The downward trend of the Bitcoin valuation has definitely caused massive liquidations, as some investors are trying to limit their losses, anticipating the further fall in the price of the cryptocurrency. These moves, in turn, caused a “fall” in the network, launching the commissions for the execution of transactions.
According to Johoe-Hoenicke, more than 160.000 transactions are currently pending, an unprecedented number according to analysts.
With the network under strong pressure, the average commission cost per transaction even reached $52. Only during the previous “boom” recorded in the field of cryptocurrencies, at the end of 2017, had the cost of completing a transaction in the Bitcoin network reached higher levels.
The problem with network congestion is estimated to have been exacerbated by power outages in China, where a large percentage of Bitcoin mining systems are located. Over the weekend, the total computing power of mining systems in the Bitcoin network fell by as much as 30%, falling to 105 exahash.