Bitcoin is slipping and how. On Friday, the cryptocurrency and its peers slid marking a 24% decline since Nov. 16 in the Bloomberg Galaxy Crypto Index. This is the worst slump on a week ever since the January peak. Bitcoin is now close to $4,000.
Last year was the bubble. And it was a glorious run to speak, as it made other historical bubbles look like sugar rush. However, the industry has lost more than $700 billion now, as fears of regulation, exchange snafus, all gripped investors.
However, it is safe to say that many investors will cut and run the moment Bitcoin heads to the $3,000 mark. But many analysts think that the cryptocurrency will trade from as high as $6,500 to a low $3,500 before slipping to $2,500 by January.
Last month, we did suggest investors look at cryptos in a different light. While recent trends indicated that cryptos were on track to join the mainstream, especially after the recent IPOs (or ICOs as the process is popularly known) that paved way for their listing in certain regulated stock exchanges, especially in Asia, the crypto crash saw market leader Bitcoin lose about three-fourths of its value.
In the long term, Bitcoin might even crash to $2,500
It has been quite a bumpy ride from there. While recovery seems to be on track, we also saw Citigroup [C] and Goldman Sachs (GS) laying the foundation to deal in cryptos — with Morgan Stanley (MS) even doing the groundwork to offer Bitcoin swap trading to clients.
There were also reports that the SEC would green-light Crypto Exchange Traded Funds in a couple of months — a crucial move that would facilitate investment in the digital currencies on a regulated platform.
While all of this sounded good just a month back, a bull run is now not so probable. Yes, virtual currencies are witnessing increased acceptance in emerging markets, especially in countries that experience economic instability. But the dubious factors around it, including the questions over its legitimacy and regulation, still haunt the crypto world.
Anyway, the consensus is out. While we are looking at a possible crash, nothing can really be said about the state of the market. Especially given that this was not how we were looking at Bitcoin just a few weeks back.