Bitcoin Surpasses $12,000 Then Tumbles as Volatility Returns

Bitcoin is reminding investors of both its promise and peril in trading.

The world’s largest cryptocurrency surged to $12,112 in trading just after midnight New York time Sunday, its first foray above $12,000 since August 2019, according to pricing compiled by Bloomberg. But it plunged shortly thereafter — 30 minutes after the high, it had dropped to $10,638. It was up 1.2% to $11,224 as of 8:41 a.m. Monday.

“There are two factors that make this market particularly volatile. One is the low level of liquidity, which is one of Bitcoin’s hallmark traits due to digital scarcity. The second is an increasing amount of crypto exchanges who offer extreme leverage,” said Mati Greenspan, founder of Quantum Economics. “When traders get a bit over excited, they tend to pile on the margin, giving way to extra large liquidations and frequent shakeouts.”