Now bitcoin is crashing along with the drop in technology stocks

Key Points
  • Bitcoin topped $3,000 for the first time Sunday.
  • But the digital currency suddenly dropped Monday afternoon ET, erasing about $500 in value as multiple bitcoin exchanges reported problems.
  • Bitcoin remains more than 150 percent higher year to date.
Now bitcoin is crashing along with the drop in technology stocks

Bitcoin suddenly plummeted Monday, amid increased worries that the young digital currency system is growing too quickly.

The decline came as major U.S. technology stocks fell for a second straight day on concerns that the sector has risen to unsustainable levels.

At least two major bitcoin exchanges also had problems, while a new blockchain project raised a record high level of funds Monday.

"We are seeing greed being exhibited in the open," said William Mougayar, author of "The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology. "This is not good for the overall ecosystem. Eventually, something more normal will prevail."

Bitcoin one-day performance

Source: CoinDesk

Bitcoin climbed above the psychologically key $3,000 level Sunday to hit a record high of $3,041.36, according to CoinDesk. The gains were helped by news that several major Chinese bitcoin exchanges were allowing withdrawals of the currency after a months long hiatus.

However, a sharp move lower Monday afternoon ET illustrated how volatile the cryptocurrency can be.

Bitcoin suddenly dropped more than 16 percent on the day to $2,532.87 before recovering slightly, CoinDesk data showed. The digital currency recovered to trade near $2,721 shortly after 9:00 p.m.

Even with Monday's decline, bitcoin remained more than 150 percent higher for the year so far. The currency first topped the $2,000 level on May 20, less than four weeks ago.

Exchange outages

The Coinbase exchange said Monday in a statement on the exchange's status website dated 2:08 p.m. ET that, "Coinbase is currently experiencing high traffic & customers have receive(d) a 'service unavailable' message when visiting"

But by nearly 5:00 p.m. U.S. time, the company updated that it had "identified and resolved the issue caused by high traffic today."

Coinbase accounts for nearly 17 percent of U.S. dollar-denominated bitcoin trade volume, according to Cryptocompare, and had reported outages in late May amid "unprecedented traffic and trading."

Another exchange, BTC-e tweeted at 2:06 p.m., ET, that it was hit by distributed denial-of-service attacks, or DDoS.


BTC-e's website was back online as of 4:01 p.m., after giving an error message earlier in the afternoon around 2:26 p.m. The exchange accounts for about 6 percent of U.S. dollar-denominated bitcoin trade, according to Cryptocompare.

Record high raised in "initial coin offering" 

Several digital currency experts also highlighted a massive raise of funds for a new blockchain-based project in a process known as an initial coin offering.

Bancor raised about $153 million Monday, a record high.

Bitcoin and ethereum, another digital currency, began to fall in price as the Bancor sale began at 10 a.m. ET Monday, Alex Sunnarborg, research analyst at CoinDesk, told CNBC in an email.

The massive amount of money Bancor raised "for a product that's still in very early testing phases has drummed up some skepticism about cryptocurrencies valuations," Sunnarborg said, noting worries that more and more traders are just trying to chase returns.

Bancor did not immediately return a CNBC request for comment.

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