Analyst: Bitcoin Price Drop Could Put its Gold 2.0 Status in Jeopardy

Over the past month, Bitcoin saw an unprecedented period of trading within a tight range, which has finally broken for the worse. The move could mark the continuance of the persisting bear market and adds a significant amount of work for bulls looking to reverse the market trend.
Today, Bitcoin’s price took a sharp fall from approximately $6,600 to just under $6,300, marking the first major breach of the previously established trading range. Over the past month, Bitcoin has been trading between $6,300 and $6,800, with this range tightening over the past couple of weeks.
Just prior to this price swing, Bitcoin had established an incredibly tight trading range between $6,550 and $6,650, which appeared to be stable until the latest drop, which brought its price to the bottom of the wider monthly trading range. It has found some stability at this price level, but it is unclear whether or not it will maintain its current price of $6,300.
Bitcoin Prices Tied to Global Equities Markets
Many analysts have attributed Bitcoin’s latest drop to pullback in the global equities markets, which could jeopardize the perception that Bitcoin is a “gold 2.0” that is immune from swings in traditional retail markets.
Craig Erlam, a senior market analyst at Oanda, spoke to MarketWatch about how the recent Bitcoin selloff is related to the global equities drop, saying:
“The selloff also appears to have stretched to more exotic instruments, with Bitcoin neither displaying the qualities one would expect of gold 2.0, as it has been touted as by some cryptocurrency enthusiasts, or simply escaping relatively unscathed as a new and relatively uncorrelated asset.”
Erlam also added that $6,000 seems to be a critical support level for Bitcoin.
“This truly is a widespread selloff and anything perceived as a risky asset has been in the firing line. What will be interesting is whether this will be enough to force Bitcoin below $6,000 which has proven to be something of a floor for the crypto on numerous occasions this year,” he said.
Altcoins have been significantly affected by the latest BTC drop, with many coins dropping more than 10% on a 24-hour trading period. XRP is currently trading down 12% at just under $0.41, and has been the most affected of the major altcoins.
ETH and BCH have also dropped significantly, both trading down 11%. Of all the major coins, XMR was one of the best performers, down only 5% in the past 24 hours.
Currently, the overall cryptocurrency market capitalization is sitting at just above $200 billion, which has historically acted as support for the markets, only briefly dipping below it on a few occasions.
Time will tell whether or not investors will defend this level or let the bears do more damage to the weak markets.
Featured image from Shutterstock.
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