Bitcoin fell 4.4 percent on Friday, slipping below $ 9,000 for the first time in two weeks.
Analysts cite a lack of positive market drivers and speculation that the US Federal Reserve may stop cutting the rate cycle this year, which could curb demand for cryptocurrency as a potential inflation hedge.
the price down to $ 8,800 per 18:57 UTC (13:57 New York time), according to the Commerce View. This is still more than double where it bitcoin at the beginning of this year, leaving cryptocurrency as one of the best performing asset class in the world in 2019.
Bitcoin has rallied over $ 2,000 at the end of October after Chinese President Xi Jinping stated that the country would embrace blockchain – cryptocurrencies underlying network of decentralized computing – as a technology “core”, followed by revealing hundreds blockchain project already in motion. Since then, though, prices have mostly fluctuated in a range between $ 9,100 and $ 9,600.
The decline accelerated after Friday bitcoin broke below the moving average 200-day $ 9186, which has been seen as a price support by some traders use technical analysis.
“This is a fairly classic example of technical measures,” said Kevin Kelly, co-founder of Delphi Digital, a research firm in New York cryptocurrency. “It’s just kind of broke down.”
The decline in prices seems to have triggered margin calls for some traders, leading to the liquidation of the position and create additional selling pressure, said Kelly.
One macro economic narrative for bitcoin buy is that, like gold, can be used as an inflation hedge, Kelly said. But with increasing signs that the economy might respond to three Fed interest rate cuts earlier this year, speculation is mounting that the US central bank may refrain in the near future from further moves to ease monetary policy, he said.
“You have seen the unwind of consensus on the last day of this story,” Kelly said.
Some investors may also become more skeptical that urge China to use blockchain community will translate into new demand for bitcoin, according to Greg Cipolaro, co-founder of Digital Asset Research.
While many traders think bitcoin, as blockchain original and largest digital assets by market value, may benefit from a more widespread adoption of the technology, if China has been working to develop digital versions of its own currency, it could be a win for technology blockchain in all but means bit for Bitcoin today.
“My opinion is that it is not right to read the news,” said Cipolaro. “They clearly say blockchain not bitcoin.”
With the realization in the background, “You really have not seen a follow-up on the price,” he said. “There are no major catalysts posting $ 2,000 tore two weeks ago.”
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