Bitcoin crashed below $30,000 on Friday as traders panicked about a technical flaw that allows people to spend the same cryptocurrency unit twice.
Google Trends for the keyword “Double Spend”—as the flaw is called—reached a perfect score of 100.
This escalated quickly! #FUD #Bitcoin pic.twitter.com/Nkx95vy4QF
— Ciara Sun (@CiaraHuobi) January 22, 2021
According to BitMEX Research, the Bitcoin blockchain detected a small double spend of around 0.00062063 BTC ($21). The claim prompted the cryptocurrency community to see vulnerabilities in Bitcoin’s public ledger system—a 51% attack that allows miners to take control over the network.
But the fears subsided later as BitMEX CTO Paolo Ardoino clarified that a double-spend event did not occur. In fact, he explained to Insider via an email, “what happened is that two blocks were mined simultaneously,” which led to a chain reorganization.
“[It] did not result in double-spending,” he added.
Meanwhile, the cost to purchase one Bitcoin dropped by about 9 percent during the said panic’s course, hitting $28,372 on US exchange Coinbase. Other factors, including a prevailing bearish correction sentiment and profit-taking behavior, also contributed to the slide.
But the crash was brief. Bitcoin rose back quickly as it touched levels below $30,000, hinting at a renewed demand for the cryptocurrency near the said price floor. The BTC/USD exchange rate shot back above $30,000 in no time, surpassing $31,700 in the pre-trading London session.
BULLISH DIVERGENCE ON BITCOIN 4H
“Beautiful dragonfly/hammer on the 4-hour [chart],” said Scott Melker, the author of Wolf Den Newsletter. “Potential bull div coming out of oversold. I’ve seen worse reversal signs, even if only temporary.”
Bitcoin underwent a similar retracement rally—of about 49 percent—after closing below $30,000 in the first week of January. Since then, the cryptocurrency appears to have formed a substantial support area around the said level, proving it with yet-another bounce-back during the January 11 trading session.
A DEEPER RETRACEMENT AHEAD?
In a video published late Thursday, the YouTuber presented the cryptocurrency’s 21-week exponential moving average as its ideal long-term support, adding that staying above it would keep BTC/USD in bullish territory. As of now, the 21-WMA is sitting near $22,000.
“It’s not that scary,” `said Mr. Jebb about the latest Bitcoin price crash, adding that it is more a “buying opportunity” for a long-term investment setup.