Bitcoin Price Watch: Currency Drops to $7,200

At press time, bitcoin has fallen by another $100, and is now trading for $7,200. The bears continue to control the market as the cryptocurrency arena has thus far lost over $150 billion from its May high.

Recently, it was announced that the U.S. Justice Department was opening an investigation into the manipulation of cryptocurrency prices and illicit activities. Peter Tchir – a cryptocurrency analyst and Forbes contributor – says he would be very surprised if it turns out that cryptocurrency prices aren’t being manipulated, and feels that bitcoin’s price swings couldn’t occur unless someone was pulling the strings.

Tchir says there are no solid or established rules in the world of cryptocurrency, and points out a few direct factors that ultimately back his theory.

“There are allegedly several very large holders of bitcoin and other cryptocurrencies,” he explains. “The concentration of wealth gives them the incentive to push prices higher. In the stock market, anyone holding a large proportion of the outstanding security is subject to additional rules and scrutiny, but no such protections exist for cryptocurrency. The person telling you about how great it is may be very incentivized to see the price go higher. Whether this falls under the definition of manipulation that is being investigated, assume it occurs and assume it distorts price.”

Tchir also points out that traders have either heard of or witnessed manipulation in other markets – from LIBOR to FX – and says that cryptocurrency miners have far too much power, and are motivated to see prices rise, thereby raking in higher profits.

“Miners earn bitcoins for what they do, so it is logical for them to want higher prices at any given time for the same amount of computing work,” he explains. “That is particularly true if mining activity is at all linked to price action… That would motivate the miners even more.”

A new report published on Yahoo! Finance suggests that bitcoin’s long-term trends remain positive, but that bitcoin is likely to strike the high $6,000 range before any serious recovery can take place. The final support mark probably lies at around $6,800 before BTC bottoms out and begins to exhibit momentum in its price hikes.

Interestingly, this report goes against the words of analyst Willy Woo, whom we discussed during yesterday’s price piece. His predictions – which were also published on Yahoo! – stated that bitcoin was likely to fall as low as $5,500 in the coming weeks, but now it appears such a drastic fall may have been an overstatement. Bitcoin would have to fail to sustain $6,800 and fall below $6,500 for this prediction to have a chance at becoming reality.

At press time, the technical analysis suggests this is not probable, nor will the cryptocurrency market cap fall below the $300 billion mark. Despite the consistent price drops over the past month, it appears bitcoin and its crypto-cousins are slated to remain above certain trading levels, ensuring that investors don’t lose too much in the end. However, it is difficult to predict when bitcoin and other digital assets can enter their respective recovery periods.