01 Feb Bitcoin drops 12% below key $9,000 level on Coinbase
Bitcoin dropped Thursday to trade just above $9,000, a critical level of support that many analysts are watching.
The digital currency fell 10 percent to $9,099 as of 11:32 a.m. ET, according to CoinDesk’s bitcoin price index, which tracks prices from four major cryptocurrency exchanges. CME’s bitcoin futures contract expiring in February fell more than 10 percent to below $9,000.
The decline followed comments from India’s minister of finance, Arun Jaitley, that raised concerns about increased regulation on cryptocurrencies in the country.
The New York Times also reported Wednesday that an increasing number of digital currency investors are worried the price of bitcoin and other digital currencies have been inflated by cryptocurrency exchange Bitfinex, which is included in CoinDesk’s price index. Bloomberg reported Tuesday that in December, the U.S. Commodity Futures and Trading Commission subpoenaed Bitfinex and a cryptocurrency company called Tether, which is run by many of the same executives.
Representatives for Bitfinex and Tether did not immediately respond to a CNBC request for comment.
Fundstrat’s Tom Lee, the only major Wall Street strategist to issue formal price targets on bitcoin, said two weeks ago that $9,000 is a “major low” for bitcoin and “the biggest buying opportunity in 2018.”
In that Jan. 18 report, Lee also raised his year-end price target for bitcoin to $25,000.
Bitcoin three-month performance
Source: CoinDesk, CNBC
Other investors are keeping a close eye on the $9,000 to $10,000 range.
Earlier this week, Joe DiPasquale, founder and CEO of BitBull Capital, a cryptofund that invests in other cryptofunds, told CNBC that hedge-fund managers he spoke with “are pretty encouraged now for the defining of a new bottom for bitcoin around $10,000. It’s a support level that can be moved up from.”
The $9,000 to $10,000 price range has been a difficult one for bitcoin to break below since it first topped $10,000 in late November. In January, bitcoin fell below $10,000 three times but always recovered, according to CoinDesk. Thursday’s levels near $9,300 marked the cryptocurrency’s lowest in just over two months.
“Lots of news regarding regulation is causing the market to panic,” said Nick Kirk, quantitative developer and data scientist at Cypher Capital, a cyrptocurrency trading firm.
India’s Jaitley said in a speech Thursday that the government “does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these cryptoassets in financing illegitimate activities or as part of the payment system,” according to a transcript from The Hindu. Jaitley also said the Indian government will explore the potentials of the blockchain technology, which is behind bitcoin and other cryptocurrencies.
“We think ethereum will outperform bitcoin by a country mile,” Kirk said. “We think the war between bitcoin and bitcoin cash is having a negative effect on bitcoin sentiment.”
Ethereum rose 2 percent to $1,144.31, according to CoinMarketCap. Bitcoin cash, which split off from bitcoin in August, traded 9 percent lower near $1,348.