Bitcoin Plunges Below US$4,000

Bitcoin Investing
Bitcoin Investing

Bitcoin has plummeted a whopping 80 percent since its record highs of just under US$20,000 in December of last year.

Bitcoin plummeted below the US$4,000 threshold on Sunday (November 25) for the first time this year, further extending its recordĀ 2018 losses over the last two weeks.

The top digital currency dipped to as low as US$3,601.52 on Sunday, but inched back closer to the US$4,000 mark by Monday (November 26). As of 2:10 p.m. EST, bitcoin had recovered 1.68 percent over a 24-hour period to US$3,872.06 as per CoinMarketCap.com.

Since bitcoinā€™s all-time high of US$19,015.40 on December 17, it is down a staggering 79.6 percent.

On CNBCā€™s Squawk Box on Monday, Anthony Pompliano from Morgan Creek Digital Assets, said that an 85 percent decrease from bitcoinā€™s record high is where the digital currency will end up, which he says puts it at around US$3,000.

When asked about investors who have left the market due to its price decline and if they will ever re-enter, Pompliano explained that bitcoin was already overvalued a year ago when it reached near US$20,000.

ā€œThere were more sellers than buyers this year, so the price goes down,ā€ he said, and explained that there are three things investors should remember.

Pompliano said said the first thing to keep in mind is that bitcoin is a transaction settlement layer and is the most secure in the world. ā€œItā€™s got to be worth something, it canā€™t be worth zero.ā€

The second thing to keep in mind is that bitcoin is still the best performing asset class over the last decade, which is up over 400 percent since its inception.

ā€œThe third thing is that was all done by retail [investors],ā€ he said.

Pompliano added that one thing to remember about bitcoinā€™s 2017 bull run is that it was driven by retail investors and 2018ā€™s focus has shifted to institutional investors entering the market.

ā€œMost of these institutional [investors] are not buying on [cryptocurrency] exchanges, theyā€™re buying on the [over-the-counter] OTC market, which we donā€™t have great transparency into or insight.ā€

Bitcoinā€™s latest drastic tumble seems to be a ripple effect from the Bitcoin Cash hard fork that took place on November 15. In the hard forkā€™s aftermath, there has been arguments on the status of Bitcoin Cashā€™s future as an asset class, according to Cointelegraph.

ā€œThere are investigations, the hard fork of Bitcoin Cash . knocked peopleā€™s confidence, volatility is back, and institutional money hasnā€™t really flowed in,ā€ Craig Erlam, senior market analysis at Oanda, told Bloomberg.

Despite the crypto crash on Sunday, all top digital currencies were back in the green on Monday. Ripple was back up 5.71 percent to US$0.36, Ethereum increased slightly by 1.28 percent to US$110.73, Bitcoin Cash rebounded by 2.83 percent to US$183.84, and EOS inched up 0.98 percent to US$3.25, all as of 4:45 p.m. EST on Monday.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.Ā 

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