The price of the cryptocurrency Bitcoin continued to fall this week, crashing to a low of $5,806 per coin on Thursday. One blockchain expert has now warned “there is more blood to come.”
In early March, the virtual currency was priced at more than $11,000 per coin but has been on a downward trajectory since, balancing out at around $5,900 on Friday. It has been a drastic fall from grace for the headline-grabbing ‘internet money,’ which sold for upwards of $19,000 in late-2017.
Ran Neuner, the founder of a blockchain company who predicted Bitcoin’s price would fall to $5,900 earlier this month, told CNBC this week that his models suggest the drop is far from over.
“Unfortunately, the same model that told us we would be going to $5,900 is telling us that there is more blood to come, said Neuner, who runs enterprise technology company Onchain. “[The model] is calling a 62 percent chance of a bear market, and a bear market means that we are going to test $5,350 as the next point,” he added, claiming that the ongoing crash will take place over the next two weeks.
A representation of the digital Cryptocurrency, Bitcoin alongside US Dollars on December 07, 2017 in London, England. The price has falling to under $6,000 this week, and one expert says it could get worse. Dan Kitwood/Getty Images
Neuner asserted: “Right now, my money is on the market continuing to go down.”
Online, the cryptocurrency community appears conflicted. For some investors the low Bitcoin price is seen as a chance to buy. Others, spooked by the numbers, are urgently selling off their assets. Neuner said that an individual’s position will depend on their motivations for buying crypto.
“It depends on your time horizon,” he explained. “If you understand the technology and you are a bull then now is a great time to be buying.
“We know that there were 27,000 blockchain startups in 2017. In the first six months of 2018 there have been 28,000 blockchain startups. There’s a huge venture capital scene, the blockchain is progressing [so] this thing isn’t going away. If you are day trading, I’m calling $5,350 in the next week or two, so you could possibly take a short position and there’s probably 10 percent in it.”
Taking a “short position” describes the process used by investors who bet on a price going down, essentially betting against the market itself in an attempt to make quick financial gains. Neuner said on Twitter that his predictive model uses artificial intelligence (AI) tech to forecast prices.
According to CryptoCompare, a website that tracks cryptocurrency values in real time, other virtual coins including Ethereum, Ripple and Litecoin, all suffered a hit this week, to varying degrees.
The reasons for Bitcoin’s fall are difficult for analysts to articulate as the market remains volatile. It is, however, coming under increasing pressure from regulators and major government bodies. Many economists, commentators and banking chiefs warned last year the high prices were unsustainable.
Initial Coin Offerings (ICO), similar to crowdfunding, have faced heavy criticism from regulators. Elsewhere crypto exchanges, used to buy and sell coins, have suffered significant hacks in recent months.
On Thursday, Bank of England (BoE) executive Sam Woods wrote a letter to banks, insurance companies and investment firms that warned of the risks involved with crypto-assets.
“The range of products and market participants related to crypto-assets has grown quickly. In their short history, crypto-assets have exhibited high price volatility and relative illiquidity,” he wrote.
“Crypto-assets also raise concerns related to misconduct and market integrity—many appear vulnerable to fraud and manipulation, as well as money laundering and terrorist financing risks,” he added. “Entering into activity related to crypto-assets may give also rise to reputational risks.”
A similar warning was issued by SEC chairman Jay Clayton in December last year.
A representation of the digital cryptocurrency, Bitcoin alongside US Dollars on December 07, 2017 in London, England. One expert warned this week: “My money is on the market continuing to go down.” Dan Kitwood/Getty Images