Bitcoin’s week from hell worsens with crash below $7 000

Bitcoin’s sell-off deepened on Friday, putting the digital token at the lowest level since May, after it dropped below yet another key support level.

The world’s most-traded cryptocurrency declined as much as 9% to US$6 914, dragging with it a host of peers from ether and litecoin to XRP. For the first time since April, bitcoin fell below its 200-day moving average without bouncing back, a signal that traders see the breach as a sign of weakness rather than an opportunity to buy.

“There’s been a general apathy in the market, and low sentiment,” said Mati Greenspan, the ex-senior market analyst at eToro in Tel Aviv. “There was excitement when Xi Jinping said China needed to embrace blockchain, but it has faded and the market is returning to levels before” the Chinese president’s comments in late October, he said.

Technicals have a big role in powering trades for virtual tokens because they lack the kind of fundamentals that can be analysed with traditional securities. Many investors say the tokens have little intrinsic value beyond the anonymity some seek for illegal financial transactions.

“Crypto traders get awfully superstitious about technical indicators, like momentum,” said Greenspan, who set up his own research outfit this week. The relative-strength index, which measures the velocity of a security’s price movement, is a technical signal of momentum.

Rumours persist that firms who mint new bitcoins, known as miners, have been selling into the downdraft, Greenspan and others said.  — Reported by Todd White, (c) 2019 Bloomberg LP