It’s a week of the long knives for bitcoin.
Bitcoin fell on Wednesday, for a sixth straight day, as the sector continues to work out the ramifications of a Chinese ban on domestic exchanges and its dizzying 2017 gains come under fresh scrutiny.
Bitcoin on Wednesday traded as low as $3,766, down more than 9% from its open of $4,148. The low also put it 25% below its record high of $5,014 hit on Sept. 2. That high – which occurred late on a Friday in New York time — appeared to spark a turning point. The currency has been steadily falling since then.
Bitcoin has dropped about 16.6% over its six-day losing streak, according to data from the Journal Markets Data Group. That is its longest losing streak since January 2016, when it had an eight-day losing streak. In terms of the depth of the loss, it’s the worst six-day stretch since this summer, when it dropped 18.3% during a six-day period that ended July 16.
Bitcoin was last trading at $3,900, according to Coindesk.
By traditional metrics, the losses would indicate the start of a bear market. But bitcoin is not a traditional market. A 20% move can come in a morning, and disappear just as quickly. After hitting a bottom on July 16, in fact, bitcoin quickly rose to $5,000 from about $1,800.
The most recent losses have come amid a flurry of negative news. The biggest is that Chinese authorities plan to shut down domestic digital-currency exchanges. It was initially reported by domestic press on Friday, then confirmed by the Journal on Monday. The Chinese government itself has not commented, so traders in the sector have been fiercely debating the stories.
Amid all that, some big Wall Street names were also weighing in. On Tuesday, J.P. Morgan CEO Jamie Dimon was asked about bitcoin at a conference, and called it a “fraud” that will “blow up.” The same day, Bank of America Merrill Lynch said that a quarter of the fund managers it surveyed called long-bitcoin was the “most crowded trade,” ahead of long-Nasdaq and short-U.S. dollar.
On Wednesday, economist Mohamed El-Erian also weighed in. While he was more constructive on bitcoin as an asset, he suggest that it was overpriced. Pressed for how much, he said, “I think the price is going to blow up.” What would be a more reasonable price? “It’s really hard to do this, but I would say at least at half of what it is, a third of what it is.”
It’s still a banner year for bitcoin. Even with these losses, the cryptocurrency is up 300% year-to-date, and is up 534% from 52 weeks ago, when it closed at $608.