Bitcoin jumped to above $10,000 briefly last month after Chinese President Xi called on his country to advance development in the blockchain field. However, on Friday, China’s central bank, the People’s Bank of China, pledged to continue to target exchanges and asked investors to be wary of digital currencies.
“This was one of the worst weeks in the history of digital assets,” Jeff Dorman, chief investment officer of Arca, told CNBC. “The market is clearly in contraction, with no new money coming in to soak up the supply.”
Bitcoin has a history of strong comebacks from big sell-offs, Dorman noted. The cryptocurrency gained 70% in the four months following a 16% loss in 2016 and similarly an 89% gain in the four months after a 22% sell-off in 2015, Dorman said.
The cryptocurrency indeed has doubled in price since the beginning of the year, marking a significant turnaround from last year, when the digital coin tanked to as low as $3,122. The most recent boost came as Facebook announced its own planned libra cryptocurrency, which analysts say has contributed to positive sentiment around bitcoin and encouraged its price.