Bitcoin Prices Drop to Yearly Low as Perceived Price Floor Gives Out
So much for that $6,000 floor. This week Bitcoin prices broke through that perceived bottom barrier, plummeting as low as $5,300. After weeks of stability and prices sitting comfortably in the $6,200 to $6,800 range, this dip brought prices to their lowest point this year. Of course it’s also a far cry from the near $20,000 prices seen in late 2017. Moreover other cryptocurrencies were also getting slammed on Wednesday, with Etherum and XRP down 13% and 15% respectively according to CNBC. So what’s happening?
One possible source of concern surrounds Bitcoin Cash. That currency — which itself is a fork from BTC — is set to undergo a hark fork today (November 15th), creating Bitcoin ABC and Bitcoin SV. The split is the result of new factions that have developed, each holding differing opinions on the future of cryptocurrencies. Exemplifying these fundamental divisions, the “SV” in Bitcoin SV stands for “Satoshi’s Vision” in a nod to Bitcoin founder Satoshi Nakamoto. Although this fork doesn’t directly involve BTC, the fork has brought a lot of uncertainty to the cryptocurrency market and could be at least one of a few culprits in the latest collapse.
Turning outside of the crypto world, it’s also possible that the tech selloff that’s helped to tank the Dow, NASDAQ, and others this week may be playing a role in lowering coin prices. As eToro Senior Market Analyst Mati Greenspan told CNBC, “Another contributing factor is the selloff in tech stocks, which could be having a spillover effect into crypto markets.” This theory, while possible, does seem slightly less likely. Then again it’s hard to estimate how many tech sector investors are also crypto investors and may see a connection that’s less obvious to casual observers.
There’s little doubt that this drop in Bitcoin price is bad news — especially since the fall broke through a seemingly established support level and ends a relatively long period of stability for the coin. However, because that $6,000 support was so well publicized, Greenspan notes that it’s possible that automated stop loss orders helped exacerbate the sell-off as investors may have been “trying to play the breakout.” If that’s the case, it’s hard to say how low prices could go now. On the other hand, it’s also possible that Bitcoin can rebound when the Bitcoin Cash hard fork is completed and the uncertainty begins to fade. In either case it’s clear that, for better of worse, some of that famous crypto volatility is back in action this week.