Bitcoin price: Expert warns cryptocurrency value has 'further to fall' before stabilising

Bitcoin fell to one of its lowest points in two months on February 5, trading at $5,947.

Risks in the marketplace were high in early 2018 which lead to more interest from investors who saw a potential for big gains in cryptocurrencies. 

But Mr Wong warned bitcoin could still be on track for further falls after experiencing dramatic plunges earlier this week.

He said: “Even the most ardent bitcoin supporter wouldn’t deny that it’s greatly inflated at the moment in terms of valuation. It’s come down a lot from the December highs but it’s still eight times higher than it was around 12 months ago. There’s an argument to be made that there is further to fall.”

Bitcoin’s current price has gained a very tidy 41 percent increase – $3,400 – from its earlier low but the northernly trajectory has flattened leading to fears that it wasn’t a recovery but rather a temporary rebound from an extended decline.

Mr Wong added that despite the positive aspects of bitcoin and raving review from supporters, the cryptocurrency still fell behind traditional currencies like the dollar and the pound in regards to common use.

Speaking to the BBC Radio 4’s Today programme, he continued: “On the one hand bitcoin is kind of a digital gold, a store value.

“On the other hand it’s a decent medium of exchange but not as good as the US dollar or the sterling.”

Bitcoin price may soon come under further regulation from the European Central Bank as concerns around cryptocurrencies grow among financial policymakers. 

European Central Bank Executive Board member Yves Mersch said the central bank can no longer ignore the threats posed by cryptocurrencies to the “real world”.

He said: “If you increasingly have bridges between the virtual world and the real world and then there is a collapse in this virtual world, it could drain liquidity from the real world. This then becomes a concern for the central bank.

“We need more information. For me, one obligation would already be to force the unregulated platforms to report transactions in a harmonised way to repositories so that we would have access to information, also in order to create a better response.”

Investopedia say that the next level of significant return will not come until roughly $10,000 but for bitcoin’s return to become something more meaningful, “the coin’s price would need to rise above its long-term downtrend, which for now comes in at around $12,000”.