Bitcoin Prices Plunge To Lowest Since January | The Paper Source University
Bitcoin prices have fallen sharply in the last few days, declining close to 20% as the global cryptocurrency markets respond to a variety of headwinds.
The digital currency dropped to as little as $7,625.19 this morning, CoinDesk figures show.
At this point, it had lost more than 17% of its value since surpassing $9,200 on Sunday, additional CoinDesk figures reveal.
Further, it was trading at its lowest in more than two months.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bitcoin Decline’s Many Causes
“The BTC plunge quite clearly has a variety of causes,” said Tim Enneking, managing director of Digital Capital Management.
“The background cause was a healthy run-up to $10.5k in mid-February and an equally healthy pullback that had just about run its course,” he stated.
“Near what would have normally been the end of that pullback, the PlusToken news hit, weakening markets that hadn’t quite yet begun to again show strength,” said Enneking.
He was referring to reports that scammers associated with PlusToken, a Ponzi scheme that drew significant funds from investors, were possibly unloading their cryptocurrency holdings, placing downward pressure on bitcoin prices.
PlusToken, which promised returns between 10% and 30% per month, attracted approximately $3 billion from unwitting investors, according to Bitcoin Magazine.
On Saturday, individuals in control of PlusToken’s wallets transferred 13,000 units of bitcoin to so-called mixers, a move that many analysts interpreted as the scammers selling their cryptocurrency, CoinDesk reported.
Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, spoke to these developmens, emphasizing that “concerns surrounding sale of BTC from PlusToken did cause initial panic and the global sell-off also impacted market sentiment.”
However, he also highlighted technical factors, stating that “the price falling below the 150-day moving average was a major setback, opening up lower supports at $8,000 and $7,800.”
“BTC has dropped below the daily Ichimoku cloud, a bearish indication that could take the price to at least $7,331,” he stated.
Analysts also highlighted the concerns surrounding the coronavirus, with Enneking stating that the news surrounding this health epidemic caused “the proverbial bottom” to fall out of the digital currency markets.
Several market observers expressed concern that bitcoin has fallen in tandem with more traditional assets lately, emphasizing that this development undermines the case that the world’s most prominent digital currency is a safe haven.
“The aspect of this drop which is far more concerning than the drop itself is the sudden, very high and direct correlation with fiat assets,” said Enneking.
“This lowers the attraction of the crypto space as both an alternative to highly correlated fiat markets, and also damages the argument that crypto (and BTC specifically) is a ‘haven’ investment asset like gold,” he stated.
“To me, Bitcoin should be acting like gold and a safe-haven during a crisis as repeatedly its price has been inversely correlated to the stock market,” said Danial.
“So the fact that both the crypto market and the stock market are dropping at the same time, shows that many investors may not yet accept Bitcoin as gold 2.0 as broadly during the Coronavirus outbreak,” she stated.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.