Bitcoin fell for the first time in four trading sessions, pushing the largest cryptocurrency back toward price levels that technical analysts say could portend greater losses.
The virtual currency fell as much as 9.2% to $31,667 in New York trading, capping a volatile week that saw the prices swing almost $10,000.
On Monday, the original cryptocurrency formed a death cross, meaning its average price over the last 50 days fell below that of its 200-day moving average. The indicator is typically seen as a closely-watched technical measure that could offer a hint at more pain to come.
“The volatility that you’re seeing there is significant and investors that are looking at that as an asset class for a portfolio, this type of volatility is not a welcome development,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management.
Much of its decline is being blamed on actions out of China, where a crypto crackdown is starting to reshape the industry. One of the country’s latest broadsides came earlier this week, when the nation’s central bank said it had summoned officials from the biggest lenders as well as AliPay to reiterate a ban on cryptocurrency services. Chinese officials are already trying to root out crypto mining operations.
Industry executives such as Binance’s Changpeng “CZ” Zhao and FTX’s Sam Bankman-Fried say Bitcoin miners are pulling the plug on operations in China. That’s backed up by a look at the hashrate, a gauge of the computing power used in mining and processing — a measure on BTC.com shows it down almost by half in two and a half weeks.
“We need to see this market stabilize and, more important, cease to be a news story,” Nicholas Colas, co-founder of DataTrek Research, wrote in a note this week. “The good news is that time will come, and with it will be another great investment opportunity. Until then we’re cautious as the proverbial long-tailed cat in a room full of rocking chairs.”
— With assistance by Vildana Hajric, and Claire Ballentine