The Bitcoin price (BTC/USD) has hit a near six-week low, further extending its losses for this week.
Having dropped below the $8,000 level in Wednesday’s early trading, the original cryptocurrency saw another sharp decline in the afternoon, with its price falling to an intraday low of $7,507.88. This was the digital coin’s lowest price level since April 12. The virtual currency eventually finished the day at $7,557.82, down from its opening level of $8,037.08.
Bitcoin had a promising start to today’s trading, as it made an attempt to recoup some of the losses incurred on Wednesday. However, after reaching an intraday high of $7,735.42, the cryptocurrency experienced a significant pullback, which sent its price below the $7,500 level. At the time of writing, the Bitcoin price was hovering around $7,375, according to data from cryptocurrency tracker Coinmarketcap.
Despite the latest slump, Fundstrat’s head of research Tom Lee is sticking to his earlier forecast that Bitcoin will reach $25,000 by the end of the year, CNBC has reported. Attributing the losses to “typical crypto volatility”, Lee identifies three factors that make him believe that the Bitcoin price will reach new all-time highs this year.
The first of those was the cost of producing and replicating Bitcoin. On Tuesday, when Bitcoin was trading at around $8,000, Lee said on the network’s “Futures Now” TV programme that the digital currency was “trading at cost” because the price of production was roughly equal to the trading price. However, on Wednesday he wrote that the price the cost of production for the coin was $6,000, meaning that despite the plunge, Bitcoin was worth more than its cost of production.
Another key factor, according to Lee, is the increased interest from institutional investors.
“I think institutional investors have gained a lot of interest, and they haven't really come into crypto yet because there is still some regulatory uncertainty,” Lee said on “Futures Now”. “But that sort of ultimate allocation into crypto as an asset class is going to be a powerful reason why bitcoin rallies.”
Lastly, Lee pointed to data compiled by Fundstrat, showing a historical trend that he deems to be favourable to Bitcoin holders.
“Historically, 10 days comprise all the performance in any single year of bitcoin's price," he said, as quoted by CNBC. "If you just took out those 10 days, bitcoin's down 25 percent a year."
"So as miserable as it feels holding bitcoin at $8,000, the move from $8,000 to $25,000 will happen in a handful of days," Lee added.
In today’s trading, the Bitcoin price stood at $7,376.17, as of 10:45 BST. The digital coin has lost 6.5% of its value in the past 24 hours.
For further information on how to buy and trade Bitcoin, see our comprehensive Bitcoin guide.