Bitcoin slumped as much as 11.3 percent on Thursday, slipping below $ 31,000.
Bitcoin closed in at its lowest in three weeks as a sizzling rally of the cryptocurrency surrenders to pessimism that prices are too high.
Bitcoin fell as much as 11.3% on Thursday, slipping below $ 31,000. The largest digital asset has trended lower since cutting through $ 40,000, and losses have accelerated in the past two days.
While high crypto prices fueled speculative mania among the Robinhood crowd, it has also made professional investors reluctant to buy at the top. Prices are still more than double the levels from early November and some technical analysts have argued that late is happening. It last traded below $ 30,000 on January 4.
“Bitcoin has already achieved the fastest price appreciation ever of any asset it has to acquire,” JPMorgan Chase & Co. strategists wrote. John Normand and Federico Manicardi in a report on Thursday. “Current prices so far above production costs that a lower mean reversal in earnings is a recurring concern.”
Bitcoin was down 7% to $ 32,467 at 2:32 pm in New York. Prices are on track for their first back-to-back weekly decline since early October.
Adding to the concern, a report in a trade blog suggested that there has been what is called a double purchase, where the same “coin” is used in two separate transactions. Industry veterans had downplayed the idea.
“This is part of the normal operation of the blockchain to allow for a very parallel system,” said Jacob Illum, chief scientist at Chainalysis researcher. “Sometimes the Bitcoin blockchain will have competitive mining blocks, but only one chain that is made up of competitive blocks will be accepted by the network.”
However, should a double-spending event actually occur, it would be a concern in the market, according to Edward Moya, a senior market analyst at Oanda.
Chart patterns suggest that the market is consolidating within a “bullish pennant” formation, according to Matthew Weller, head of research at Gain Capital Group LLC. A sharp move higher could push prices above $ 50,000, while a lower cut would point to a deeper price below $ 30,000, he predicted.
“It would likely take a more serious fall to remove the established uptrend,” Weller wrote in a note.
Despite the sale, Wall Street has not lost interest in the new asset class. On Wednesday, BlackRock Inc. filed a lawsuit. paperwork to add Bitcoin’s future as a qualifying investment in two funds, the first time the currency manager has offered clients exposure to cryptocurrency.