Bitcoin plunges close to $12000 but analysts predict bounce back

Bitcoin crashed below $13,000 and was closing in on $12,000 on Friday to record a plunge of 66% this week as the total cryptocurrency market lost close to $150bn from its total market value on Friday alone - though with analysts saying rebounds are likely.

After almost hitting $20,000 at the weekend, the digital currency's tumble over the week steepened with a $2,000 fall in 12 hours on Friday.

Bitcoin has not had an easy week, initially suffering a major cyber attack in South Korea that knocked its price by 15% and with some demand flowing out its competitors as they starting to trade on the popular Coinbase exchange.

Rival cryptocurrencies slid along with bitcoin on Friday, however, and the total estimated value of the crypto market fell to $480bn compared to the $650bn it had reached earlier that day.

Bitcoin's journey this year has been very volatile reaching a record high on Sunday of $19,666. Even though it has fallen to approximately $13,000 it’s still a big improvement from $900 at the start of the year and bigger still if we look back at it’s starting price of less than 1 cent in 2010.

Several analysts believe that Bitcoin could bounce back again. Neil Wilson, senior market analyst from ETX Capital said: “Has the bubble finally popped? It’s hard to see the bell tolling just yet. Large price swings have become so normal that it’s hard to decide – we can easily see this market bounce back in very short order”.

David Cheetham analyst in XTB Online trading said: “There is no real fundamental reason behind the latest decline, although there is growing speculation that some of the largest holders of bitcoin may be following in the steps of Charlie Lee, the Litecoin founder who stated earlier this week that he had sold his entire holding in the altcoin”.

One potential reason for the fall could be a sale by an investor or anyone with a relatively large stockpile of the digital currency, suggested Kerim Derhalli, founder and CEO of Invstr.

"This increase in availability could have initially driven prices down, with other holders – especially those that bought at the top of the market – panicked into offloading as a result.”

He pointed out that the meteoric price rise this year is mostly due to the highly illiquid nature of bitcoin's current market. "There are very few Bitcoin available to buy on the open, which pushes prices up.”