Bitcoin has finally broken out of its recent trading range and to many analysts surprise, it was to the downside tumbling more that 10 percent which just goes to show, the relative stability we witnessed in Bitcoin over the last few months may have been temporary.
The reason for the sudden slump is bitcoin Cash, usurper, which forked from bitcoin last year and is now forking again.
In previous instances, forking was pretty much tolerated by the market but it seems as if this time Investors decide it was time to bail.
So is $5000 the new bottom for bitcoin or are more losses in store for the crypto currency?
Analysts seem very divided over this question
“Bitcoin has just broken below a 12-month support band defined by the February, April, June and August-October lows, we would caution traders/investors from presuming this breakdown is a headfake,” said Rob Sluymer, technical analyst at Fundstart Global Advisors
On the other end of the spectrum, we have founder and CEO of BKCM, Brian Kelly who noted that the pullback may be a buying opportunity but cautions that anybody that doesn’t understand what forking is should be cautious about entering the market.
"People started selling. That triggered stops. Everybody got concerned, that’s what happened today, the entire market sell-down." Kelly said
This will be a "very short-term" event. I think it's probably an opportunity, In fact, we did some buying at my fund today (Wednesday) he added.
"If you don't understand what a 'hard fork' is, do not jump into that pool right now. It is the deep end." Mr Kelly said.