26 Nov 2018 Update:

The crypto market took a massive hit over the weekend, with Bitcoin dropping almost 20% to hit a low of US$3,653. As expected, the market made a half-hearted rally back above US$4,000 before dropping back down to the US$3,800+ level.

With lower lows still being made and investor confidence in cryptocurrencies at an all time low, we are expecting the market rout to continue.

21 Nov 2018 Update:

In a massive crash that does not look like stopping, Bitcoin continues to head lower towards US$4,000. The market rout looks set to continue as fear, uncertainty and doubt assailed investors in a fearful market. As the euphoria dies, prices are consolidating with lower highs and lower lows.

Stay vigilant.

Posted on 19 Nov 2018:

Ten years ago Bitcoin was so new it hadn’t been traded once. Five years ago they cost US$200 each. But last year the price soared from less than US$1,000 a coin to within touching distance of US$20,000.

Then it crashed.

Since December’s high, Bitcoin’s price has dropped by more than two thirds – losing almost US$15,000 in value. In the past week alone a new crash wiped another US$1,000 from the price according to figures from Coinbase.

That’s a fall of 16% in a week, 35% in a year, according to Coinbase figures. In the past 24 hours the price even dipped to below US$5,200.

At the time of writing, the price is US$5,279 – that’s the lowest since October last year.

The fall is particularly shocking, because after months of stability around US$6,000, the crash seemed to come out of the blue – just as experts were predicting it was time for the currency to rise again.

“Bitcoin and other major cryptocurrencies saw some of the biggest lows for over a year,” said Luno chief executive Marcus Swanepoel.

Jordan Hiscott, chief trader at ayondo markets added: “Bitcoin’s move to a low … of US$5200 left many wondering where the impetus for a double digit move came from, indeed over 10% in one session, especially when over the past four weeks there hasn’t been a move of over 2%.”

Why is Bitcoin crashing now?

Most people blame the current falls on fears of a “fork” in Bitcoin Cash.

A fork is when one crypto currency becomes two. What effectively happens is that someone copies the existing currency, alters it to change the way it works, and re-issues the new version. Sometimes the original one continues as it is, with the new version going off to operate independently.

Other times, the community moves to the new version en masse – deciding it’s a better prospect. These are known as “hard forks”. It’s not the first – or even the third – time Bitcoin’s code has resulted in a new currency. Bitcoin Cash is the most successful so far – launching late last year in the middle of the currency’s price surge and going on to become worth billions. Now Bitcoin Cash is forking – but there are problems.

“The Bitcoin Cash blockchain has been undergoing scheduled hard forks every six months to upgrade and improve the protocol,” explained Swanepoel. “In most cases, these hard forks are uncontested with the whole community supporting them. In this case, however, consensus couldn’t be reached with two factions emerging, and proposing different solutions for the upgrade.”

fears of a split are not just affecting Bitcoin Cash – but the entire community. That has led to drops in Bitcoin, Ethereum, XRP Litecoin, Cardano and Dash to name a few.

Making money from the fall

If you’re convinced Bitcoin is on the brink of collapse, there are two ways to cash in.

If you have Bitcoins, and are worried, sell them. Even if you miss later growth, there’s nothing wrong with taking a profit from an investment and you’ll still be up if you bought them more than a year ago.

“Due to current uncertainty, there is the potential for extreme volatility, certainly if you had long positioning in either Bitcoin cash or other crypto currencies, it would make logical sense to reduce risk, at least until more is known,” Hiscott said.

If you don’t have any there are still ways to make money from a fall. The simplest way is to bet on it falling. This can be done with a contract for difference or simple spread bet at a variety of exchanges.

If the price has dropped in the interim you can make a tidy profit. Conversely, if the price starts to rise, you could be on the hook for a decent-sized loss – although this can be limited using a stop-loss. There’s a good explanation of your options here.

Should you buy it while it’s cheap?

If you’re thinking the collapse is a great time to buy – our advice is wait.

There’s an old stock market saying: “Never try and catch a falling knife.” Put simply, if you buy during a fall, the risks are significant. That’s because – much like a rapidly descending sharpened piece of metal – trying to get hold of something mid-fall has a small chance of success and a large chance of you getting hurt.

Hang in there, stay positive, stay cautious.