In this photo illustration, a visual representation of the digital Cryptocurrency, Bitcoin is on display in front of the Bitcoin course’s graph on February 09, 2021 in Paris, France.
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Bitcoin fell sharply on Tuesday continuing a major sell-off that began a week ago.
The digital currency fell over 13% to hit an intraday low of $38,585.86 at around 12:54 a.m. ET, according to CoinDesk data. It was the lowest level since Feb. 9, the last time it dropped below $40,000.
Negative news over the past week has dampened sentiment for bitcoin.
On May 12, Tesla CEO Elon Musk said the electric carmaker had suspended vehicle purchases using bitcoin, citing environmental concerns over the so-called computational “mining” process. This is where high-powered computers are used to solve complex mathematical puzzles to enable transactions using bitcoin.
Musk’s comments caused over $300 billion to be wiped off the entire cryptocurrency market that day.
Close to a bottom for bitcoin?
Bitcoin is off by about 39% from its all-time high of $64,829.14 which was hit in mid-April.
Vijay Ayyar, head of business development at cryptocurrency exchange Luno, said that a 30% to 40% pullback is “normal” during bitcoin bull markets.
“So this is very much expected after we topped out at 64K ($64,000),” he said.
Ayyar pointed to a roughly 35% correction in January as well as similar falls during the huge run-up in bitcoin’s price in 2017.
“We are definitely close to a bottom” around $38,000 to $40,000, he said.
Bitcoin bull Mike Novogratz told CNBC on Tuesday that he sees $40,000 as a buying level for the digital currency. The investor, who runs cryptocurrency financial services and investment management Galaxy Digital, said he expects bitcoin to consolidate in a trading range between $40,000 to $55,000.
“Then we’ll have another leg up. And I say that not just by guessing. We see institutions moving in, and it takes them a while,” Novogratz said.