BITCOIN’s (BTC) price dipped below $6,500 (£5,026) yesterday as it fell below a key price point, which could be a sign of an imminent slide in its value, a crypto expert has predicted.
Yesterday bitcoin’s price was $6,571 (£5,080) at its height, which dropped 2 percent to $6,436 (£4,976) over 24 hours.
While only a small swing, the fact the price dipped below a key price point - known as a horizontal support - could be interpreted as a sign of an imminent slump in BTC’s value, or “breakout from the downside”.
A breakout refers to a security's price movement through a historical resistance level.
Crypto expert Nikola Lazić has predicted a downside breakout - which means the price could be on the verge of a plunge.
He said: “I am expecting a breakout from the downside because the horizontal support has already been broken today, the red triangle’s support has been broken in the past when the price found support on the symmetrical triangle’s uptrend line which was respected in the past.
“If that last support gets broken then we are definitely seeing a lower low which would be below $5767 (£4,458).”
He added: “It could get really bad.”
A key volatility indicator - which shows the extent of bitcoin’s price range - hit its lowest level in 21 months in September, meaning BTC’s value could be about to swing in either a upwards or downwards direction.
But BTC’s healthy price floor implies the market has a vested interest in preventing further price slumps, in an indication of a potential bearish (downward) trend.
The world’s leading cryptocurrency has experienced a turbulent year as its price continues to fluctuate.
At the time of writing, bitcoin was trading at $6,573.26 (£5,083)
The digital asset has performed relatively poorly this year in comparison to 2017.
Like most cryptocurrencies, BTC is an unpredictably volatile asset and sometimes experiences huge ranges in its price over very short periods of time.
In December 2017 BTC’s price more than doubled - reaching record highs of £15,244 per coin, only to plunge by 45 percent, and then rebound back to £11,000.
Of cryptocurrency’s volatile value, Yves Mersch, a member of the European Central Bank’s executive board, said: “At these speeds, if you bought a bunch of tulips with bitcoin they may well have wilted by the time the transaction was confirmed.”
But Fundstrat’s Tom Lee believes bitcoin will finish the year on a strong note.
The crypto expert said: “The fact bitcoin is holding here is very good news.
“I think there are catalysts in the year-end so I think despite the lower highs we’ve seen I think we’re starting to reverse.”
But the UK Government has been hesitant to endorse the decentralised asset, with senior officials speaking out against its potential pitfalls.
Nicky Morgan, the Treasury Committee chair, has described bitcoin as a gamble, rather than an investment.
Ms Morgan claimed cryptocurrency belonged to a “wild west” industry.
She said: “Bitcoin and other crypto-assets exist in the wild west industry of crypto-assets.
“This unregulated industry leaves investors facing numerous risks.
“Given the high price volatility, the hacking vulnerability of exchanges and the potential role in money laundering, the Treasury committee strongly believes that regulation should be introduced.”