The price of the leading cryptocurrency dropped below $7,000 today. Bitcoin is currently trading at the level of $6,634 according to the Bitcoin Price Index of Coinmarketcap.
Bitcoin’s Recent Decline
The digital currency has dropped over 60% from the all-time high it climbed last December when it nearly touched the level of $20,000. During this period, Bitcoin has seen both major declines and important recoveries. In February, it dropped under the level of $6,000 and then it climbed back to $12,000 later the same month.
When trying to describe the reasons why Bitcoin has witnessed instability lately, the experts and analysts concluded to the following factors:
Many industry influencers blamed uncertainty around the regulatory landscape of cryptocurrencies as an important factor of Bitcoin’s negative price swings.
Chief Executive Officer and founder of ExsulCoin (a blockchain startup), James Song claimed that many traders are selling their assets due to the uncertain regulatory environment that is surrounding the leading cryptocurrency.
Crypto Asset Management’s managing director, Tim Enneking highlighted that the regulatory framework of the United States has forced Bitcoin downwards. However, some other countries such as Switzerland have offered more bullish guidelines for cryptocurrencies.
Further, Jeff Koyen (360 Blockchain USA’s CEO) believes that if the cryptocurrency industry reaches more trustworthy regulation, it can potentially draw more institutional investors to digital currencies.
Normal Market Reaction
According to Enneking, the leading cryptocurrency is witnessing a natural ‘fallback and consolidation” after the huge uptrend that took place in 2017 (below $1,000 to $19,780 in less than a year). The whole cryptocurrency market climbed along with Bitcoin, rising from under $20 bln to over $600 bln during the last year.
After the digital currencies saw these powerful gains, many traders had to sell a portion of their assets in order to keep up with their tax responsibilities, as analysts reported.
Flashmoni’s CMO, Sebastião Coelho stated that due to tax season of United States, many traders are examining their portfolios in order to decide which assets provide value and which assets they should reallocate.
What is the lower level Bitcoin can reach according to analysts?
As the major cryptocurrency is still trading far below its all-time high, Enneking believes its bottom could not be lower than $6,000. Mr. Koyen agrees with this level, stating that if we take into account the recent downtrend of Bitcoin, finding support at this level is quite impressive.
Despite some people expecting a bottom around $3,000, Koyen claimes that Bitcoin can reach as low as $6,000 before it starts climbing again.