Having once knocked at the door of $20,000 during its peak toward the end of 2017, the price of cryptocurrency bitcoin sunk to new lows during trading on Tuesday.
As of Tuesday morning, bitcoin had fallen about 15 percent in 24 hours to below $4,500—its lowest point in 2018—and many expect it to dive further over the coming days and weeks.
“The only question now is how low the new correction will turn out,” said an analyst’s note from FXPro, a currency broker based in London.
“Experts predicted a decrease in bitcoin (BTC) to the area near $3,500, at which point the cryptocurrency will stabilize and receive some support from market participants.
“At the moment, we have the same ‘hype factor,’ which pushed BTC to $20,000 last year, but however, in the opposite direction: from rapid growth to extreme fear and sell-off.”
A week ago, bitcoin was trading at about $6,300, before falling sharply in the following days.
“Last week’s sell-off seemed to be a turning point for the crypto market,” FXPro said, before noting that today’s drop “was not a single sharp collapse as last week but rather a systematic sell-off throughout the day.”
The note continued: “Markets participants are trying to sense whether this is the bottom, however no sure answer can be given. Over the past week, the world’s leading cryptocurrency fell by $1,650, and at the moment there are no signs of recuperation.
“Bitcoin was under intense pressure after breaking through the consolidation zone, which was formed over the previous few months.
“The total cryptocurrency market capitalization plummeted by $52 billion over the week, and market turmoil spiked the average daily trading volume by 62 percent.”
John McAfee, the anti-virus software founder who is now a bitcoin advocate, said investors in the cryptocurrency markets—which are almost all experiencing drops—are panicked.
But he urged them to stick it out.
“People have panicked,” McAffee wrote on Twitter. “But there’s no f*****g need. We’re in a bear market. They suck, yes…But I’m 73 and have seen this dozens of times in many markets. Bear markets are like Winter. It’s always followed by a glorious Spring. F*****g relax.”
Neil Wilson, the chief market analyst at Markets.com, called it a “bloodbath.”
“Things looks like they only get worse from here. Where is the incentive to buy? It does rather look like the bottom is coming out of this market,” Wilson told The Guardian.
Bitcoin started its meteoric rise in 2017. It began the year trading at just below $1,000 and ended it around the $20,000 mark before falling again sharply again throughout 2018.
The cryptocurrency uses blockchain technology—a kind of digital ledger book—to verify transactions, significantly reducing the risk of fraud.
There is only a finite number of these coins available, and they can be “mined” through a process that involves solving highly complex mathematical equations.
Bitcoins are held in anonymous digital wallets. Critics argue cryptocurrencies make it easier for criminals to launder money, and that they are just another investment fad for speculators.
But proponents argue the technology behind cryptocurrencies is revolutionary and will eventually become the new norm for the financial system by making it more efficient.