- Bitcoin's price has fallen over $520 from the record high hit on Thursday last week.
- Around $3.4 billion has been wiped off the value of bitcoin since Thursday.
- Bitcoin experts still see the price rallying after the correction.
Nearly $4 billion has been wiped off of the value of bitcoin
in the past four days after a correction that has seen the cryptocurrency's price fall almost 19 percent from its recent record high. On May 24, bitcoin hit an all-time high of $2.791.69. But on Monday, the digital currency was trading at an intra-day high of $2,267.73, marking a more than $520 drop or 18.7 percent decline since the record high, according to data from CoinDesk. "The correction was actually quite brief, the prices today are still higher than that of a week ago," Bobby Lee, CEO of BTCC, a major bitcoin exchange, told CNBC by phone.
"I think the pullback was just a profit taking, a correction from the skyrocketing prices of last week." Bitcoin's market cap fell from $40.49 billion on Thursday to around $37.08 billion on Monday, a roughly $3.4 billion decline in value. Last week, Nicola Duke, a technical analyst at analysis platform Forex Analytix, told CNBC that $2,800 could mark a level of resistance where bitcoin pulls back. The analysis appeared to be correct with bitcoin reaching within $9 of the price before falling to the lower levels on Monday.Still, Lee thinks the correction is temporary and the price rise will continue because "the macro situation hasn't changed". Some major factors have been supporting bitcoin's major rally this year
including:
- Japan legalizing the cryptocurrency for payments.
- A resolution to the "scaling debate" within the bitcoin community. Transactions were taking longer than ever to process and the broader community was trying to figure out a way to boost the capacity of the Bitcoin network. A solution was created and backed by major parties within the community.
- Start-ups raising funds through a so-called initial coin offering or ICO, which is helping to drive alternative cryptocurrencies.
Longer term, proponents of the digital currency are excited about the prospect of the broader sector which could potentially rival fiat currencies. Investors appear to currently be positioning for another price rise in bitcoin. Total active margin trading long positions have risen from 18,576.54 bitcoin on Thursday, to 21,168.90 bitcoin on Monday, according to data from CryptoCompare. Margin trading involves borrowing funds in order to buy or sell bitcoin. The rise in long positions shows that traders are expecting a rise in the cryptocurrency.
There is still a lot of bullishness in the market with some calls for the price to reach as high as $6,000 this year. "There is a lot of fresh liquidity flowing into Bitcoin, thanks to a surge in interest among investors in Asia, notably Japan and Korea, coupled with a resolution to the scaling debate. I would not be surprised to see the bitcoin price doubling again to around $6000 by the end of the year," Aurelien Menant, CEO of Gatecoin, a regulated cryptocurrency exchange
Chuck Reynolds
Contributor
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