Renewed interest in digital currencies has been sparked over the last week after Facebook announced plans for its Libra cryptocurrency, analysts said. Bitcoin has been steadily rising since April and had rocketed by more than 260 percent this year. However, BTC still remains below its all-time high of nearly $20,000 (£15,781) hit in December 2017. Bitcoin had reached an 18-month high of nearly $14,000 (£11,046) earlier this week, but pulled back on Thursday by falling to as low as $10,501 (£8,286), according to data on Coin Desk.
As of 8.35am BST, bitcoin had clawed back some ground to trade at $11,498 (£9,072), but was still down 7.24 percent.
Mati Greenspan, senior market analyst at trading platform eToro, said: “It seems the crypto market got a bit too hot yesterday and is now cooling down.”
The price of bitcoin began to tumble on Wednesday after cryptocurrency exchange website Coinbase appeared to crash.
Investors were thrown into chaos as a notice on Coinbase read: “An error has occurred.
“We’ve been notified about the issue and are taking a look.”
The website was up and running again hours later, and it is not clear what caused the problem.
Bitcoin dropped more than $1,700 (£1,341) in just 15 minutes off the back of the outage and sank below $12,000 (£9,453), according to Market Watch.
Craig Erlam, senior market analyst at Oanda, told Inverse website: “The latest rally appears to be tied to the launch of Facebook’s Libra coin and the publicity it has received.
“Whether people see this as legitimizing cryptocurrencies — being tied to Facebook — or the size of the rally has attracted people seeking quick profits, like back in 2017, isn’t important but it’s clearly helped it find its groove again.”
Investors seeking an alternative asset to gold and United States bonds as a safe haven due to worries about weakening global growth also helped contribute to bitcoin’s rally, analysts said.
At the time of writing, the price of ethereum’s ether was also lower at $298 (£235).
Ripple’s XRP was at $0.40 (£0.32), also down on the day.