Markets
Bitcoin Price Drops Below $8,000, Down 42% Year-To-Date
Bitcoin price continued to decline over the weekend, falling below the $8,000 mark for the first time since November 2017. As of 14:15 UTC, the cryptocurrency was trading at $7,414.95, down 9% from its price 24 hours ago.
Over the weekend, bitcoin lost 15% of its overall value. Since the beginning of the year, the same metric equates to a decline of approximately 42%. Bitcoin’s valuation is responsible for about a third of the overall cryptocurrency market.
Other coins, which have previously caught up with Bitcoin to gain valuations, are also swooning. Among the top 10 most traded digital currencies, most have seen double-digit declines with Ripple, which is down 66.37% at the time of writing, leading the way.
The cryptocurrency market cap was $364.7 billion at the time of writing. It had fallen to $348 billion by Friday morning, a level it had previously touched during the first week of December 2017.
What is causing the price of Bitcoin to plummet?
A mix of regulatory concerns and the absence of a large trader willing to counter market behavior is causing prices to decline globally.
Several large companies, including Facebook Inc. (Facebook page), and countries like India, they banned or are considering banning cryptocurrency-related products and services.
Banks have also started to block cryptocurrency purchases through their credit cards. Wells Fargo has started the practice and JP Morgan Chase Inc. (JPM), Citigroup Inc. (CITI) and the Bank of America Corporation (BAC) joined last week. This morning, a group of British banks, including Lloyd’s banking group, also did a similar ad.
China, which until 2017 was the largest cryptocurrency exchange, announced further measures this morning to limit trading of the asset. According to a report by South China Morning PostThe country is planning to block foreign cryptocurrency trading websites and initial coin offerings. Regulations on domestic investor participation and foreign ICOs will also be tightened, China’s official news agency Xinhua said.
Several China-based exchanges have moved offshore or started targeting foreign investors after banning trading last year. Hong Kong-based Binance is among the largest cryptocurrency trading venues and was reportedly adding 200,000 users per hour at one point. (See also: Are Bitcoin and Cryptocurrency Prices Totally Dependent on China?)
Typically, a price crash is a buying opportunity for asset believers. But cryptocurrency markets seem to have exhausted their reserve of supporters. Simon Tobler, a trader at CryptoFinance AG, expected a crash to $5,000 levels if prices fall below $8,000. According to him, cryptocurrency markets do not have large buyers willing to support prices while other traders exit.
But there may be better times ahead
Other analysts, however, are doubling down on bitcoin. Fundstrat’s Tom Lee reiterated his price target of $25,000 for bitcoin by the end of 2018. He said that “the fundamental positive story for cryptocurrencies remains intact.”
Lee wrote: “Past sell-offs have been followed by rallies of about 150% within 84 days. In other words, we think the risk/reward at these levels justifies adding here, even if there is further downside.”
Another bitcoin investor, Ran Neu-Ner, predicted a low of $7,500 followed by a rally to $20,000 by the end of this year for bitcoin. “We’ve seen it go down 50 percent at a time. It’s a pretty resilient currency/commodity/asset that keeps going up after that,” he said. She said.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the author to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, you should always consult with a qualified professional before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. The author holds small amounts of bitcoin as of the date this article was written.