Market analysts stand by prediction that market will see spectacular recovery
Bitcoin has experienced huge price drops in recent days, with the cryptocurrency tumbling by more than $2,000 (£1,600) to take its value below $8,000 for the first time since June.
It has since recovered slightly but many investors remain cautious about bitcoin’s short-term prospects. Others, however, remain convinced that the cryptocurrency will continue to see considerable gains before the end of the year.
Bitcoin was trading at around $4,000 at the start of 2019, having suffered prolonged losses since it reached a record high of close to $20,000 at the end of 2017.
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Steady gains throughout 2019 saw bitcoin triple in price by August, before its latest crash took it back down again.
“The volatility of cryptocurrencies is what makes them excellent conduits of growth for traders, investors and growing businesses,” Daniele Mensi, CEO of digital exchange group Nexthash, told .
“What is important to remember is that bitcoin is still up around 115 per cent this year, so its short term peaks and troughs are necessary to facilitate longer-term growth across the currency.”
Noted commodity trader Peter Brandt predicted bitcoin will continue to fall until it reaches $5,500, but will then continue its upward trajectory.
In the long term, he forecasted bitcoin to be worth $50,000 – a figure seen as conservative by some cryptocurrency advocates.
Cyber security pioneer John McAfee, who has become a prominent figure in the cryptocurrency space, stood by a prediction he made in 2017 that bitcoin will see exponential price growth in 2019 and 2020.
“Ignore this drop in bitcoin’s price. I am firmly with Peter Brandt in his medium term $50k price prediction,” Mr McAfee tweeted.
“I am also firm on my $1m price by the end of 2020. Stop wringing your hands!”
The price of bitcoin tripled between January and August 2019 before a cryptocurrency market crash knocked thousands of dollars from its value in late September (Getty Images)
It is difficult to pinpoint the exact reason for bitcoin’s most recent demise, though some have said negative market sentiment can be attributed to the launch of the bitcoin futures platform Bakkt.
Pessimism surrounding Bakkt resulted in a mass sell-off, which at one point saw more than $1,000 wiped from bitcoin’s value in the space of 30 minutes.
Bitcoin’s notorious volatility could see traders once again plough money into the cryptocurrency in the hope of turning a quick profit, according to market analyst Simon Peters, who works for online trading platform eToro.
“Now that bitcoin is now trading below $8,500, it could become an attractive proposition for investors who want to buy the dip,” he said.
“We could see the price rise back up to $10,000 within the space of the next month.”