Bitcoin’s latest drop to a 3-month low below $6,000 could be seen as the end of a round trip.
On Nov. 1, Bitcoin (BTC) prices received a shot in the arm on news that derivatives marketplace operators CME Group, Cboe and Cantor Fitzgerald were considering launching futures for the market in December. It was widely believed that BTC would zoom to dizzying heights as a move to the mainstream would open doors for a bigger kind of whale.
The speculation drove prices higher to $10,000 in November, and the sharp rise and resulting fear of missing out established a positive feedback loop, one that sent prices to $20,000 by mid-December.
However, since then, the BTC has been steadily losing altitude.
A stream of negative news concerning regulatory crackdowns in some of the world’s largest markets – China and South Korea – pushed BTC below the $10,000 mark in mid-January. That said, the drop witnessed in the last five days could be associated with the decision of major banks to bar customers from buying Bitcoin with credit cards. China’s decision to block access to foreign cryptocurrency platforms has only worsened the sentiment.
As of now, Bitcoin is trading around $6,500 – a level last seen on November 1.
Indeed, market forces have not worked as anticipated by many. The Dow index fell more than 1,000 points recently, triggering a wave of risk aversion in the equity markets across the globe. However, it has not had any positive impact on Bitcoin, despite its status as a “digital gold.”
That said, the oversold BTC could see a relief rally if the US Senate finally adopts a softer approach to regulating cryptocurrencies than China.