Bitcoin Falls Off A Cliff To Reach Lowest Since July

Bitcoin prices dropped today, extending their recent losses as the cryptocurrency declined to its lowest in more than a month.

The digital currency fell to as little as $10,505.15 close to noon EDT today, CoinDesk figures show.

At this point, bitcoin had declined roughly 8.4% from its intra-day high of $11,470.81 reached at approximately 4 a.m. EDT, additional CoinDesk data reveals.

Further, it was trading at its lowest point since July 27, when the digital asset fell below $10,000.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

When explaining the cryptocurrency’s latest price movements, market observers pointed to several factors, including both technical factors and fundamental developments.

Technical Analysis

“The current move is technical in nature and comes after prices tested the $11K support around 8 times in the last 30 days,” said Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital.

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“As highlighted in our previous comments, there is strong support in the zone between $10K and $10.5K and prices are yet to test that zone,” he stated.

“We don’t think we will see any major declines that will break this support zone in the short term and Bitcoin is likely to consolidate between $10.5K and $11K before attempting to cross $11.5K again,” said DiPasquale.

Kiana Danial, CEO of Invest Diva, also provided some technical analysis.

“The BTC/USD has formed a head and shoulder bearish reversal chart pattern which may have opened doors for further drops towards $10,500,” she emphasized.

“The pair has also tested the daily Ichimoku cloud, which is currently acting as strong support. A break below the Ichimoku cloud may signal a medium-term downtrend for the Bitcoin price, with the $9,500 zone set as the next key support layer.”

Impact Of The U.S. Dollar

Danial also weighed in on the greenback’s recent fluctuations relative to other fiat currencies.

“The USD appears to have bottomed out across major fiat currencies including the Canadian dollar and the Swiss Franc,” she noted.

“So the strength of the US dollar could certainly be one of the reasons why Bitcoin’s price is dropping.”

Tim Enneking, managing director of Digital Capital Management, offered a different, more skeptical assessment.

“The idea of a sudden strong correlation to the dollar because the dollar made a major move on the same day BTC did is a bit fanciful, I think – particularly since we’re talking about two consecutive days of BTC drops.”

He went on to provide an alternate explanation for the digital currency’s recent declines.

Potential Rotation Into Equities

Enneking noted that “The timing of the drop yesterday from $11,750 to $11,200 was basically the same as the drop today from $11,300 (after a slight recovery) to $10,700: basically when NY woke up.”

“Over the past year, the US EST ‘wakeup’ has been increasing in importance as a time for major moves; over the past several months, that trend has strengthened,” he said.

“So I might posit a new theory: the steady drumbeat of record highs in US equities which, after much initial skepticism on Wall Street has now acquired a bit of (resigned) legitimacy, has caused many investors (which, in BTC are growing individually larger and more concentrated) to elect to rotate from BTC (which hasn’t done much lately) back (presumably) into equities.”

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.

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