It wasn’t long ago that bitcoin looked like it was making a comeback. Recently, however, it has hit a speed bump.
Bitcoin’s price came tumbling down Monday as it dropped to $6,558 at 1:00 a.m. EST, its lowest level in six months. (Since bitcoin is continuously traded, there is no closing price for it.)
The notoriously volatile cryptocurrency rebounded quickly, however, and reached $7,100 a few hours later on Monday. That’s still better than when it traded below $4,000 at the beginning of the year. But since its peak on July 9, bitcoin prices have dropped more than 45%.
Only a few weeks ago, bitcoin experienced a nice rally, with prices more than doubling to a 2019 high of around $8,500.
One thing that may have added to investor confidence is that China appears to be taking more steps to embrace bitcoin. Chinese President Xi Jinping recently made bullish comments about the technology that acts as a ledger for bitcoin transactions, calling blockchain an “important breakthrough.”
“China has been the catalyst for the major moves and swings in the bitcoin,” said Mohamed Zidan, chief market strategist for ThinkMarkets in Dubai. “The last rally was because Chinese president declared his plans about increasing the investment in blockchain technology and digital Yuan.”
Bitcoin’s recent decline came after the People’s Bank of China said it would tackle the growing number of illegal cases involving virtual currencies, Zidan said.
“It was a signal for crypto investors that Chinese future for blockchain investments and digital currency would not include cryptocurrencies like bitcoin,” he said.
But Lennon Sweeting, director of institutional trading with Coinsquare Capital Markets, said Monday’s drop is likely just a sign of the bitcoin stabilizing.
“President Xi’s comments on blockchain technology and its importance for China sparked a pretty significant rally,” said Lennon Sweeting, director of institutional trading with Coinsquare Capital Markets. “And I think really what we’ve seen here is just a small correction on the back of those headlines.”