Bitcoin prices tumbled on Monday by the most in two months, falling below a key threshold of $8,200 not seen since late October.
The bellwether cryptocurrency changed hands at $8,139.64 as of 18:41 UTC (1:41 p.m. New York time), down 4.7% over the prior 24 hours, according to CoinDesk's bitcoin price index (BPI). The price is still more than double where it started 2018, making bitcoin one of the world's best-performing assets.
Bitcoin's price surged in late October after Chinese President Xi Jinping said the country planned to embrace the blockchain – the type of decentralized computer-programming network that underpins cryptocurrencies – as a core technology. Many traders and investors speculated at the time that bitcoin, as the oldest cryptocurrency and the largest by market value, stood to benefit from the new push by the world's second-largest economy.
But according to Joe DiPasquale, CEO of the cryptocurrency hedge-fund firm BitBull Capital, there haven't been enough developments since then to create additional enthusiasm among traders and investors. Bitcoin had traded for several weeks in a range between $9,100 and $9,600, so a recent move below that level may have spurred some traders to sell, exacerbating the price drop. Trading volumes also have been unusually low recently, he said.
"We expect for there to be some investors taking profit after these big newsworthy spikes," DiPasquale said in a phone interview.
Market signals suggest the price is likely to find support at $8,100, DiPasquale said, and if it fell below that level, the cryptocurrency would probably drop further, toward $7,400.
In the longer term, DiPasquale said, there is a bullish case for bitcoin due to the so-called "halving" expected in May 2020 – when rewards for mining new blocks of transactions will be cut in half, essentially reducing the supply of new units of the cryptocurrency.
If the price jumps back above $9,000, he said, bitcoin would then probably head back toward $10,000, DiPasquale said.
Prices for the cryptocurrency are still well off their year-to-date high around $13,000 reached in late June.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.