The largest cryptocurrency slumped, reaching another fresh low for the year. Photo: Pixabay

JOHANNESBURG – Bitcoin is turning negative again. And the technicals aren't looking too good either going into 2019. The largest cryptocurrency slumped, reaching another fresh low for the year.

The digital token dropped as much as 4.2 percent to $3 567 (R50 400) yesterday, flirting with the prior 2018 low of $3 522 reached on November 26. It's trading around the lowest level since September 2017.   

After a few days of relative stability, volatility has increased again in the wake of November's plunge, which was the biggest monthly drop in more than seven years.

Bitcoin is caught in a strong selling trend – its most pronounced since the sell-off it underwent mid-year, when the price tumbled from about $9 300 in May to around $6 600 in July, according to the Directional Movement Index. If that plunge is an indicator of how things might play out, then Bitcoin could be in for a continued rout. In addition, the Average Directional Index, or ADX, a technical indicator that rises as negative selling trends strengthen, is at its highest level since July. If it crosses above 50 – it is currently hovering around 47 – it will be the first time it does so this year in a negative pattern.

Prices for Bitcoin and other cryptocurrencies are likely to weaken, with Bitcoin falling to around $1 500, said Bloomberg Intelligence analyst Mike McGlone in a note on Wednesday. That would imply an additional drop of 60 percent in Bitcoin’s price from its current level. Bitcoin has fallen close to 80 percent from its December 2017 record high when it hit $19 511.

“There’s little to prevent fading Bitcoin prices from reaching the continuous mean of $1 500,” wrote McGlone. A rush to the exits among investors seems to be in place, he said, attributing it to the Bitcoin Cash split and selling related to year-end tax purposes, among other things.

Cryptocurrencies have seen a massive sell-off in the last month, with the largest tokens shedding billions in market value since Bitcoin Cash forked in November. 

That came as two software-development factions failed to agree on a way to upgrade the offshoot of the original Bitcoin, leading to a computing power arms race.  |  Bloomberg