Cryptocurrencies are notorious for their volatility but had been experiencing several months of stable trading before an unexpected drop in value on Thursday.

As much as five percent of the cryptocurrency’s value was lost in a matter of just minutes.

The digital coinage hit a low of $ 6,180 (£4698) on Thursday evening before a small recovery in price early Friday morning which has since seen the value of Bitcoin stabilise around the $ 6,2350 (£47400) mark.

However, despite the day of stable trading, there have been warnings the cryptocurrency could be set to experience a sudden further fall in value.

September 2018 was Bitcoin’s narrowest monthly trending range since July 2017, according to Coin Desk.

And the monthly rating volume throughout September was the lowest since April 2017, according to data from one of the world’s largest cryptocurrency exchanges, Bitfinex.

Periods of low volatility often reach a calamitous conclusion for the Fin Tech asset, particularly when accompanied by low volume.

These factors mean the cryptocurrency is likely to experience a period of either sustained growth or a downward price trend.

Given Thursday’s sudden drop a collapse in price now looks the more likely of the two scenarios.

However, given the unpredictable nature of cryptocurrency trading it is unclear the exact path Bitcoin will take.

The volatility of the digital asset’s market has led Nicky Morgan, the chair of the UK’s Treasury Committee, to describe Bitcoin as a gamble, rather than an investment.

She said: “Bitcoin and other crypto-assets exist in the wild west industry of crypto-assets.

“This unregulated industry leaves investors facing numerous risks.

“Given the high price volatility, the hacking vulnerability of exchanges and the potential role in money laundering, the Treasury committee strongly believes that regulation should be introduced.”

At the time of writing Bitcoin’s price is $ 6,224.56 (£4732.07).

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Daily Express :: Finance Feed

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