Bitcoin fell below crucial support today, a move that could trigger additional downside and also threaten the bullish momentum the digital currency has enjoyed in recent weeks.
The cryptocurrency dropped to as little as $8,290.24 around 8:45 a.m. EST, CoinDesk data shows.
At this point, the digital asset had fallen roughly 3.6% in less than six hours, declining from its intra-day high of $8,597.33, additional CoinDesk figures reveal.
Multiple analysts cited profit taking when explaining this downward move.[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
“The current decline can be attributed to rejection in the resistance zone between $8750 and $9100, following which profit taking made sense for traders and investors,” said Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital.
“Falling under $8500 puts additional pressure on Bitcoin’s price,” he noted.
However, “there is strong support between $8000 and $8200, and we can expect the price decline to take a breather at $8200.”
While the cryptocurrency might face additional losses in the short-term, Tim Enneking, managing director of Digital Capital Management, said that in the long-term, he is looking for the digital asset to bounce back.
“The downward corridor of the past six months has been pretty solidly broken to the upside,” he stated.
“In addition, for the past month or so, the progression on lower lows at the bottom of the corridor have switched to higher lows,” said Enneking.
“This move potentially puts that at risk, but we think ultimately a new corridor will continue to form to the upside,” he stated.
Going forward, bitcoin’s price could benefit from the ongoing maturation of the digital currency industry, as market infrastructure continues to improve and the regulatory environment keeps evolving.
“We are continuing to see the operational infrastructure of the industry evolve positively for digital assets,” said Charles Hayter, cofounder and CEO of digital currency data platform CryptoCompare.
Further, “global regulators are working in conjunction to harmonise rules on AML KYC, travel rule and general standards for exchanges and custodians to operate by.”
“This gives standardisation across national jurisdictions which allows for certainty of business and derisks for companies involved.”