The bitcoin price had already been in decline leading into Tuesday morning, causing it to dip below the $19,000 level shortly before midnight ET. The downward slide continued throughout the morning, and by 5:30 the bitcoin price was trading at $18,401.
Bitcoin shed another $300 over the next hour, at which point it took a precipitous fall. From 6:36 to 6:52, the bitcoin price plunged from $18,144 to $17,255, with most of that movement taking place during a seven-minute firesale.
Since then, the bitcoin price has managed to recover to $17,560 on Bitfinex, nearly $500 below its value on Bitstamp ($17,978) and GDAX ($18,057).
The reason for the bitcoin price’s early morning decline on Bitfinex is not immediately clear, but there are several potential factors.
At least one analyst attributed the sell-off to the breaking news that South Korean exchange Youbit had been hacked and its parent company was filing for bankruptcy. However, Youbit plays a minor role in the South Korean market — much less the global cryptocurrency ecosystem — so its closure should not have a significant effect on the price of bitcoin on Bitfinex. Moreover, the bitcoin price continued to trade near $20,000 on Korean mega-exchange Bithumb, indicating that Korean traders were not overly concerned about the hack.
A more likely scenario is that bitcoin’s early-week decline spooked wealthy investors with weak hands, who determined to take profits following the dramatic market upswing that occurred during the lead-up to the launch of bitcoin futures on CME. The global average bitcoin price has declined approximately $2,000 since CME’s futures began trading on Sunday afternoon, and traders may be concerned that bitcoin will stumble — rather than march — into the new year.