Bitcoin bounced back quickly after its sharp drop. According to CoinDesk, the digital asset surged more than 11% for a short period on Wednesday, a high of $7,336.80. It is within 10% of its record surge of $7,879.06 touched last Wednesday. However, the controversy surrounding Bitcoin’s future led to its 30% fall over the weekend.
In an established stock market, a decline of nearly 10% from a recent high sets stock in “correction” and a fall of 20% in “bear market” terrain.
Followed by the news of Jack Dorsey’s company Square testing support for bitcoin via its payments cash app, bitcoin swelled on Wednesday. On Wednesday, Credit Suisse analysts referred to bitcoin as a buying option that could help stock.
Square shares swelled more than 5% in the open before closing, nearly 2% higher. The company is testing bitcoin on a small scale, focusing on allowing customers to buy and sell the digital currency within the app. The test limits individuals or businesses from sending or accepting bitcoin, Square said.
A crypto trading firm, Genesis Global Trading, noticed that bitcoin bounces back dramatically from large drops. For instance, bitcoin fell more than 20% this year and gained an average of 28% in the following two weeks and 61.5% in the following four weeks, according to analysis.
According to CryptoCompare, trading in Japanese yen accounted for around 56% of bitcoin trading volume Wednesday. US dollar-bitcoin trading volume led to about 25%. Ethereum, the second giant, traded 1.5% lower, at $331, according to CoinDesk.
In an email, Alex Sunnarborg, founding partner, Tetras Capital, stated that the recent volatility was caused by the events clouding bitcoin and bitcoin cash and the record-breaking exchange trading volume among the two large investors, miners, and retail investors in Asia. The mail further read that the price of bitcoin and bitcoin cash have moved inversely among each other, pushing the price of bitcoin down as it flows to bitcoin cash and vice versa.
How to improve bitcoin’s transaction speeds and costs is still a controversial subject.
SegWit2x, an upgrade proposal, was called off last Wednesday, leading bitcoin to swell to its record high before it crashed.
An upgrade to split bitcoin and bitcoin cash had taken effect in August.
According to CoinMarketCap, Bitcoin cash, the offshoot, traded lower Wednesday near $1,222, nearly 50% below its record high of $2,477.65 hit Sunday.
Bitcoin gold launched on Sunday plummeted around 20% in the last 24 hours to $162. Bitcoin aims to mine or create digital currency with less dependency on specialized hardware.