Bitcoin's price continued its slide over the weekend, falling below the $8,000 mark for the first time since November 2017. At 14:15 UTC, the cryptocurrency was changing hands for $7,414.95, down 9% from its price 24 hours ago.
Over the weekend, bitcoin shed 15% of its overall value. Since the start of this year, the same metric is equal to an approximate decline of 42%. Bitcoin’s valuation is responsible for approximately one-third of the overall market for cryptocurrencies.
Other coins, which picked up the slack from bitcoin earlier to boost valuations, are also in a swoon. Among the top 10 most-traded digital currencies, most have witnessed double-digit declines with Ripple, which is down by 66.37% as of this writing, leading the way.
The market capitalization for cryptocurrencies was $364.7 billion as of this writing. It had crashed to $348 billion on Friday morning, a level it previously touched during the first week of December 2017.
What’s Crashing The Price Of Bitcoin?
A mix of regulatory concerns and the absence of a large trader willing to buck market behavior is causing a worldwide decline in prices.
Banks have also begun preventing cryptocurrency purchases through their credit cards. Wells Fargo started the practice and JP Morgan Chase Inc. (JPM), Citigroup Inc. (CITI) and Bank of America Corporation (BAC) joined last week. This morning, a group of British banks, which included the Lloyd’s banking group, also made a similar announcement.
China, which was the biggest trading venue for cryptocurrencies until 2017, announced further measures to clamp down on trading in the asset this morning. According to a report in the South China Morning Post, the country is planning to block overseas websites for cryptocurrency trading and initial coin offerings. Regulation pertaining to participation of domestic investors and overseas ICOs will also be tightened, Xinhua, China’s official news agency, stated.
Several China-based exchanges moved offshore or have begun targeting foreign investors after it banned trading last year. Hong Kong-based Binance is among the largest trading venues for cryptocurrencies and was reportedly adding 200,000 users per hour at one point of time. (See also: Are Bitcoin And Crypto Prices Totally Dependent On China?)
Ordinarily, a crash in prices is an opportunity to buy for believers in the asset. But the cryptocurrency markets seem to have exhausted their supply of well-wishers. Simon Tobler, a trader with CryptoFinance AG, predicted a crash to $5,000 levels if prices fall below $8,000. According to him, the cryptocurrency markets lacks big buyers willing to prop up prices as other traders exit.
But There Might Be Better Times Ahead
Other analysts, however, are doubling down on bitcoin. Tom Lee of Fundstrat reiterated his price target of $25,000 for bitcoin by the end of 2018. He said the “fundamental positive story for crypto remains intact.”
Lee wrote: “Past sell-offs were followed by rallies of ~150% within 84 days. In other words, we think the risk/reward at these levels warrants adding here, even if there is additional downside."
Another bitcoin investor, Ran Neu-Ner, predicted a bottom 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 quite a resilient currency/commodity/asset that just keeps going up afterward,” he 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 writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin.