Traders fear that bitcoin may be destined to stagnate between the $6,000 – $7,000 range after the Securities and Exchange Commission (SEC) rejected proposals from the internet entrepreneurs Cameron and Tyler Winklevoss would become the first exchange-traded fund (ETF).
Susquehanna head of digital assets Bart Smith believes Bitcoin is ready to for a breakthrough into the higher price range.
Speaking to CNBC, Mr Smith said: “A lot of traders see the $6,800 level is something it needs to break through. We have lower highs and lower lows, and we need to break out of that.
“You look forward to a new bitcoin ETF coming out and there is a lot of enthusiasm. The price goes all the way up to $8,400. The ETF gets rejected and it goes down again.”
Prices slipped back into the red today for the third day in a row, with Bitcoin fell 4.22 percent on the day, trading at $7,565.76, down $160 in a 24 hour period.
The bears have moved in to drive prices down, with Ethereum losing 2.61 percent to trade at $414.36, while Litecoin fell 0.81 percent to trade for $76.71.
Ripple is one of the only major cryptocurrencies to see a small gain this morning, rising 3.19 percent to trade at $0.4356.
The current trader positioning for bitcoin is indicative of a bearish incoming trend, according to IG Markets senior strategist Ilya Spivak.
Talking to Business Insider, Mr Spivak said: “The latest numbers show that close to 78% of IG retail traders are net-long bitcoin, with the ratio of traders long to short at about 3.5 to 1.
“We typically take a contrarian view of crowd sentiment, and the fact that traders are net-long suggests Bitcoin may be heading lower.”
“What briefly looked like it may be an upside breakout fizzled as BTC/USD fell back into a Triangle consolidation pattern carved out since February.
“Critical support remains in the $US5790-$US6450 area, with a break below that opening the door for a test below the $US5,000 figure.”
In March, Bank of England Governor Mark Carney said cryptocurrencies such as bitcoin were a “failure” during a speech at the Inaugural Scottish Economics conference on Friday.
Following the speech, Mr Carney told Bloomberg News: “It’s ten times more volatile than sterling. It’s not a stable hold of value.”
He added: “It’s not that efficient. For example, it costs about one and a half pence to use cash, eight pence to use a debit card in the UK, swipe cards, your iPhone – it costs about two pounds to use bitcoin on a transaction basis.
“You layer on top of that the environmental costs and other factors. It’s just not that good at doing what it is supposed to do.”