The bitcoin price briefly dove below $11,000 on Friday as the market searched for a support level to stem its severe correction.
The bitcoin price endured a violent correction on Friday, headlining a day in which the cryptocurrency market cap crashed by more than $165 billion and many new investors learned that "hodling" is a lot less fun when the charts turn sour.
Less than a week after hitting an all-time high of $19,891, the bitcoin price plunged to its lowest mark since December 3. At one point, the bitcoin price crashed as low as $10,700 on Bitfinex, representing a $9,000 pullback from its high-water mark and forcing the flagship cryptocurrency's market cap below $200 billion. By press time, bitcoin had recovered back to $11,450 but continued to swing violently.
The retrace has been led by Western traders, and bitcoin's top three trading pairs all belong to the U.S. dollar. Asian exchanges continued to price bitcoin at a premium relative to Western exchanges, and the spread between the markets widened as U.S. traders woke up and Korean traders went to bed.
At the time of writing, there was a $4,201 price discrepancy between Bitfinex, the largest exchange with a BTC/USD pair, and Bithumb, the largest Korean exchange. This translates into a 37 percent premium in Korea, the largest in recent memory.
That the bitcoin price would endure a significant retrace following its parabolic December run should not be surprising. Although no one could predict with certainty when the correction would occur, anyone familiar with the markets knew it lay somewhere on the horizon.
For long-term investors, this retrace is par for the course. However, many bitcoin investors -- perhaps even most -- have never experienced a true bear market. It remains unclear how far the market will drop before it reaches a support level, but one thing is certain: it will shake out many weak hands along the way.
Write to Josiah Wilmoth at josiah.wilmoth(at)cryptocoinsnews.com.
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