Bitcoin, the world’s largest digital currency by market value, has been struggling to define a new trend after plunging to its lowest in more than two months.
The cryptocurrency dropped to $6,647.33 at roughly 18:15 UTC (2:15 p.m. EST) on Sunday, a nearly 12.5% decline from the same time 24 hours before, CoinDesk Bitcoin Price Index (BPI) figures show.
At this point, Bitcoin had fallen to its lowest price since April, hitting a more-than two-month low, additional BPI data reveals.
[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.]
When explaining this decline, analysts cited various factors, including the recent hack on South Korean exchange Coinrail and a notable sell-off.
“The hack in South Korea may have fired the starting gun on yesterday’s price drop,” said Matthew Newton, analyst at social trading platform eToro.
However, the “major fall” took place later in the day, when “there was a surge in volume as potentially a large sell order was dumped on the market.”
“Currently there is no indication of what caused this, but it certainly seems to have accelerated the drop,” he stated.
CFTC Subpoena’s Impact
In addition to these two factors, several analysts claimed that the market finally priced in the subpoenas that the U.S. Commodity Futures Trading Commission (CFTC) issued Friday.
These subpoenas targeted four exchanges, and they involved an investigation in to price manipulation, sources familiar with the matter told The Wall Street Journal.
Bitcoin’s recent drop was partially a “delayed reaction” to this news, said Charles Hayter, co-founder and CEO of digital currency data platform CryptoCompare.
Struggling To Find Direction
Since hitting its recent low on Sunday, the digital currency has fluctuated within a relatively tight range, moving between roughly $6,600 and $6,900.
At the time of report, Bitcoin was trading at $6,738.68.
Going forward, the digital currency could face additional headwinds, according to technical analysis provided by two market observers.
David Johnson, CEO of cryptocurrency tasking platform Latium, noted that going forward, the market will experience either a bullish trend or a bearish one.
Should the digital currency follow a bearish trend, “We see a daily close below $6,600,” said David Johnson, CEO of cryptocurrency tasking platform Latium.
“In this case I feel strongly we will test the psychological level at $6,000 and it is possible to drop to $5,800 before really finding support as the support channel ranges from $5,700 – $6,000.”
“Whole numbers will always create some level of support, but $6,000 has not historically been a major support level for Bitcoin.”
Mati Greenspan, senior market analyst at eToro, also weighed in.
The lows hit during the last few days could provide some support, he noted.
“If it does break through we could be looking at psychological support at $5,000,” said Greenspan.
Should Bitcoin experience a bullish trend going forward, the situation could be completely different, stated Johnson.
“We see a daily close above $7,100. In this case we should see a move to test resistance at the $7,700 level. A break of this resistance level should push BTC up to test the $8k psychological level.”
“Sell offs will normally out pace bull runs. Fear is always a little stronger than greed, so if we start moving back up expect the movement to take longer than a move to in the opposite direction.”
Disclosure: I own some Bitcoin, Bitcoin Cash and Ether.