The bitcoin price sat within inches of setting a new yearly high.
The bulls flinched, and the leading cryptocurrency promptly embarked on a 10 percent plunge.
Bitcoin Price Slides Below $12,000
Earlier today, the bitcoin price peaked as high as $13,200, less than $700 below the 2019 high it recorded late last month.
However, BTC failed to sustain that momentum, and within hours it had shed more than $1,000.
Traders held the line at $12,000 for several hours, but the cryptocurrency capitulated to the downward pressure around 3:35 pm ET, ultimately sliding as low as $11,867 on Bitstamp for an intraday loss of 10%.
Theories for the Sudden Sell-Off
There is no consensus explanation for bitcoin's sudden step downward.
BitMEX Research noted that the price collapse coincided with one crypto mining pool attempting to introduce an invalid block to the BTC network. However, a software bug was the likely culprit - not miner malfeasance - and there's no reason to think that this triggered a market sell-off.
The timestamp of the invalid block was 14:35:27 UTC, 21 seconds after the previous block
This appears to have coincided with a drop in the Bitcoin price, however this is probably only a coincidence. (The blue line in the below image represents the timing of the invalid block) pic.twitter.com/PA8EbOY1G9
— BitMEX Research (@BitMEXResearch) July 10, 2019
Another prominent theory related to Federal Reserve Chair Jerome Powell's congressional testimony this morning, in which he warned that Facebook's cryptocurrency project "cannot go forward" until the social media giant addresses serious concerns.
Many analysts previously credited the announcement of that project, dubbed Libra, with sparking the rally that carried BTC past the $10,000 mark.
As Bitcoin Loses Steam, Altcoins Might Bounce Back
So where does the crypto market go from here?
Today's crash *could* be the end of the downtrend for alts vs BTC. pic.twitter.com/rYtWCTERul
— Alex Krüger (@krugermacro) July 10, 2019
However, altseason isn't here yet.
Bitcoin last traded at $12,087 on Bitstamp, leaving its market cap near the $215 billion level. The cryptocurrency is down 3% for the day, with most other large-cap cryptocurrencies recording losses of more than 6%.