Bitcoin prices have been rampant during the past few days. Soaring into the $200+ zones and dipping well below the $180 – prices, investors and traders alike have been taken aback by the erratic price movement.

The prices of Bitcoin fell away during the start of the year. Positive news this year has been a rarity as thousands of Bitcoin users saw the price of Bitcoin drop like a stone. Breaking all supports of $200 and under the price went into free fall less than 24 hours digging further and further. However as bad as times may have been the recent price hike upwards has lightened spirits and has brought Bitcoin back into the upward swing. The reasons behind the recent price crash remain largely unknown as there have been a variety of causes pointed out. In our previous article we explored how Butterfly labs attempted to reimburse customers

Margin trading

The introduction of margin trading may be one of the causes of the recent price drop we have seen in Becton Pantera Capital – a bitcoin investment firm,  wrote in a morning note.

“Increased use of leverage in the bitcoin market, both on the long- and short-side, has likely increased the magnitude of price moves.”

The recent price hike has meant that the losses encountered by the many have been recuperated to some degree. For those who purchased between $180 to $195 profits are to be taken during the recent price rise which has propped up Bitcoin price to over $211 but prices remain stable just under the support level of $200. The Bitcoin has also been recognised as one of the best investments of the year so far comparing against the likes of real currencies such as the Russian Ruble. The Russian Rouble was one of the worst performing currencies of the year whilst the bitcoin price rise and reduction in volatility compared to the previous year,

Whilst the press surrounding Bitcoin may be negative market analysis clearly shows how the Bitcoin has allowed plenty of users to experience unparalleled financial freedom and allowed many traders to make a quick buck of the increasing volatility.

Speculation

Speculators have gone on a frenzy recently speculating on what was the cause of the crash and how far the bitcoin will go. Many assume the current market movement is simple price correction and is Bitcoin going to its true value whilst others see this quick recovery as a sign of a price rally. Judging by current market books it seems as if the last of the sub $200 coins have been bought and price will recover.

To conclude the recent price movement may have been simply due to ButterFly labs dumping their coins to reimburse customers or a natural phase undertaken by the market to shake off weak hands. With speculators on the loose spinning theories of the prices hitting 10k or permabulls counting on another price crash the Bitcoin prices remain as wild as ever. Tomorrow can bring good news or bad but in reality no one can predict what bitcoin will have in store.