Bitcoin crashes below US$6,000 mark, as fellow cryptocurrencies join the slide
- Bitcoin was down 9 per cent to US$5,690, while ethereum was down 10 per cent
Bitcoin fell to a more than one-year low on Wednesday, breaching a key support level of US$6,000 and causing a wave of selling in the digital currency and other crypto assets in what has been a prolonged market slump that began early this year.
Bitcoin fell to as low as US$5,533.09 on the Bitstamp platform. It was down 9 per cent at US$5,690.47.
“For the last few days you could see the consolidation happening and the price was moving on the downside,” said Naeem Aslam, analyst at ThinkMarkets, a multi-asset online brokerage.
“The break of US$6,200 yesterday gave a fair indication that there are no buyers on the sidelines at this point,” he added.
Bitcoin’s weakness spread to other cryptocurrencies, with ethereum, the second-largest, dropping to a two-month low. Ethereum was last down 10 per cent at US$182.41.
Wednesday’s sell-off in cryptocurrencies pushed the sector’s market capitalisation to under US$200 billion for the first time since around mid-September, according to data from industry data tracker coinmarketcap.com.
“What you are seeing … is a breakout on the downside. Sometimes when things happen, it takes a while for the true reason to become clear – an exchange trade or regulatory action,” said Charlie Hayter, founder of industry website Cryptocompare in London.
Other market participants suggested that Thursday’s impending “hard fork,” or split of bitcoin cash – another cryptocurrency that emerged out of bitcoin – into two separate currencies, has caused some volatility as well.
Twice a year, bitcoin cash undergoes scheduled protocol upgrades, which include splitting its network.
“For our trading activities, the hard fork recently has generated tremendous interest and trading volume, above 4 billion daily, among traders,” said Ricky Li, co-founder of crypto trading and advisory firm Altonomy.
Overall, analysts said the outlook for bitcoin remains unclear, with longer-term forecasts dependent on the virtual currency becoming a reliable store of value or a viable payment mechanism.
However, there are growing signs of greater institutional participation in bitcoin, such as increased demand for a bitcoin exchange traded fund and rising bitcoin futures volume, analysts said. But they noted that actual participation remains low among both institutional and retail investors.