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Article / 06 October 2014 at 13:32 GMT

Bitcoin's slippery slope could see it fall to $100

Managing editor, TradingFloor.com / Saxo Bank
Denmark
  • Bitcoin value halved since July 6 to around $320
  • Cryptocurrency at its height was at nearly $1,200
  • Bitcoin could fall as low as $100

By Martin O'Rourke

Is Bitcoin dead in the water? You could be forgiven for thinking so.

Since July 6, the Bitcoin average price has more than halved from $634 to $305 October 5. Less than 12 months ago, the price of a Bitcoin was a whopping $1,072. 

Bitcoin at its height hit $1,186.03 (www.bitcoin.de) on November 29. To put that in context, gold was at $1,197.20/oz at GMT 12.52, October 6.

"From a technical analysis point of view, it is not that surprising that Bitcoin is dropping from its all-time high of just below $1,200 to $300 ," said Saxo Bank technical analyst Kim Cramer-Larsson. "Bitcoin has drawn a typical bubble patternBubbles look similar regardless of the instrument."

"When a bubble bursts, the asset usually drops back down to at least the pre-peak level which is usually the last major correction before the blow out top and ultimate peak," he said.

"Sometimes during the build up to a bubble scenario, there are two pre-peaks. In this case it the last major correction occurred November 2013 between $400 and $700 and Bitcoin has already dropped to that level."

"The first major correction, which was actually also a bubble pattern back then, was in April 2013 with a top at around $250," said Cramer-Larsson.

Does Bitcoin's plunge still have some way to go then?

"That is the minimum Bitcoin should drop to," warned Cramer-Larsson.  "It could drop to the lowest level in that correction – that is around $100."

bit
 Bitcoin's star has waned since its heady November 2013 highs. Photo: Thinkstock

Martin O'Rourke is managing editor at TradingFloor.com

For more on Bitcoin, please go to our dedicated page
3y
Adam Courtenay Adam Courtenay
A bitcoin elite running down the price before running it up again? That's what Jeffrey Robinson says
2y
V for Vendetta V for Vendetta
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