For months, the price of Bitcoin has been hovering around the mid-$6,000s mark. No longer. The most popular cryptocurrency has plummeted by 12% over the last day, hitting a value of little more than $5,500.
The total market capitalization for Bitcoin now stands at $96 billion—the first time the market cap has fallen below $100 billion since October last year. The total market cap for the entire cryptocurrency scene now stands at $181 billion.
Bitcoin is far from the only casualty, with cryptocurrency price charts all firmly in the red right now. XRP (Ripple), the second-biggest virtual coin, is down 9.2%, Ethereum’s Ether is down almost 13%, and Bitcoin Cash is down 8.7%.
So, volatility is back, but—as is so often the case—it’s not entirely clear why that is.
One theory, touted by BKCM founder Brian Kelly on CNBC, is that the crash is being caused by disagreements over a “hard fork” in Bitcoin Cash.
Hard forks are where a major software upgrade takes place on a cryptocurrency, essentially creating a new cryptocurrency (with free coins for existing coin holders) while leaving the old one intact—that’s how Bitcoin Cash formed in the first place, and now it’s doing it again. There is no majority agreement in the Bitcoin Cash community over which version would be best, though.
IMF chief Christine Lagarde also hit the headlines on Wednesday by calling for more countries to explore the potential of digital currencies—but central-bank-backed digital currencies, not Bitcoin-style cryptocurrencies.
A few countries such as Sweden, China and Canada are already exploring this idea, with a key driver being maintaining the safety of currency-using consumers. There is a possibility that, if such schemes come to fruition, they could encourage regulators to crack down on competing cryptocurrencies that offer no such protections.