Bitcoin drops to 11.3% on Thursday, slipping below $ 31,000.
Bitcoin has moved closer to three-week low as the scorching cryptocurrency rally gives way to pessimism that prices are too high.
Bitcoin fell 11.3% on Thursday, slipping below $ 31,000. The largest digital asset has been on a downtrend since breaking $ 40,000, and losses have accelerated in the past two days.
While the surge in crypto prices fueled a speculative mania among the Robinhood crowd, it also made professional investors reluctant to buy at the top. Prices are still more than double their early November levels and some technical analysts have argued that a retracement is overdue. It last traded below $ 30,000 on January 4.
“Bitcoin has already achieved the fastest price appreciation ever of any must-have asset,” JPMorgan Chase & Co. strategists John Normand and Federico Manicardi wrote in a report Thursday. “Current prices are so much higher than production costs that reverting to lower average yields is a recurring concern.
Bitcoin was down 7% to $ 32,467 as of 2:32 p.m. in New York City. Prices are on track for their first consecutive weekly drop since early October.
Adding to the anxiety, a report in a trading blog suggested that there had been something called a double purchase, where the same “coin” is used in two separate transactions. Industry veterans have played down the notion.
“It’s part of the normal operation of blockchain to enable a highly parallel system,” said Jacob Illum, chief scientist at researcher Chainalysis. “Sometimes the Bitcoin blockchain will have competing mined blocks, but a single chain forming competing blocks will be accepted by the network.”
However, if a double-spending event did occur, it would be of concern in the market, according to Edward Moya, senior market analyst at Oanda.
The graphical patterns suggest that the market is consolidating in a “bullish flag” formation, according to Matthew Weller, head of research at Gain Capital Group LLC. A sharp move upward could push prices above $ 50,000, while a downward breakout would indicate a retracement deeper below $ 30,000, he predicted.
“It would likely take a more severe decline to erase the established uptrend,” Weller wrote in a note.
Despite the sale, Wall Street has not lost interest in the new asset class. On Wednesday, BlackRock Inc. filed documents to add Bitcoin futures as a qualifying investment in two funds, the first time the fund manager has offered its clients exposure to the cryptocurrency.