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The price of bitcoin plunged below $5,000, Tuesday, reflecting deteriorated investor confidence in virtual coins.
It was the first time the digital coin fell below $5,000 in 13 months. The price fell below the $6,000 level last week, and has continued its downtrend by hitting the lowest level of the year.
According to global virtual coin indicator coinmarketcap.com, the price of bitcoin was $4,703.72 as of 2:30 p.m. on Tuesday. The price saw a decrease of over $600 in a day, a 30 percent drop in a week and nearly a 70 percent fall from its peak in January.
Now, pessimism is prevailing among investors, reflecting their fears the price could fall even further.
"The next logical level of support is at $5,000 but if that doesn't hold, the next logical support level isn't until $3,500," said eToro analyst Mati Greenspan in his recent note to clients.
"With all the falling prices lately, this definitely fits the definition of a buyer's market."
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| A display board shows prices of various virtual coins at the Bithumb headquarters in Seoul, Tuesday. / Yonhap |
"The bitcoin price, which had peaked at over $20,000 earlier this year, seemed to get stabilized at the $6,300-to-$6,500 range in September and October, but investors then started exiting from a risky asset market," said a domestic blockchain firm official who asked not to be named.
"Not only the nation's stock market but also the housing market has started showing signs of a downturn. Such a tendency seeking for an asset safe haven is likely to be more evident for a while."
Other major cryptocurrencies were also mostly lower this week, and have fared even worse than bitcoin this year.
Ripple, the second largest coin by market capitalization, fell 5 percent while Ether dropped more than 13 percent Tuesday, according to coinmarketcap.com.
Roughly $40 billion has been wiped off the entire cryptocurrency market capitalization in the past week. Now, the total market capitalization is estimated at around $172 billion as of Tuesday.
Despite growing skepticism, Asia Innovations Group's Gifto Korea head Park Dong-hwi stressed his optimism in the future course of bitcoin.
"The value of bitcoin is the backbone of cryptocurrencies and blockchain technology," he said.
"It could stagnate sometimes. However, it's an inevitable factor. Like it or not, industries will adopt the related technologies, and we will see more virtual coins in the future. In the long term, the price of bitcoin will bounce back as long as a wider range of industries start adopting the technology."
