Bitcoin (BTC) Price Drops Below $ 40,000, But Bottom Could Be Close

In this photo illustration, a visual representation of the digital cryptocurrency, Bitcoin is shown in front of the Bitcoin course chart on February 9, 2021 in Paris, France.

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Bitcoin fell sharply on Tuesday continuing a major sell-off that began a week ago.

The digital currency fell more than 13% to hit an intraday low of $ 38,585.86 around 12:54 am ET, according to data from CoinDesk. It was the lowest level since February 9, the last time it fell below $ 40,000.

Negative news over the past week has dampened sentiment for bitcoin.

On May 12, Tesla CEO Elon Musk said the electric car maker had suspended bitcoin vehicle purchases, citing environmental concerns over the so-called computational “mining” process. This is where high-powered computers are used to solve complex mathematical puzzles to enable bitcoin transactions.

Musk’s comments led to the removal of more than $ 300 billion from the entire cryptocurrency market that day.

Near a bottom for bitcoin?

Bitcoin is down by about 39% from its all-time high of $ 64,829.14 that was reached in mid-April.

Vijay Ayyar, head of business development at cryptocurrency exchange Luno, said that a 30% to 40% pullback is “normal” during bull markets for bitcoin.

“So this is highly anticipated after we hit a high of 64,000 ($ 64,000),” he said.

Ayyar noted a correction of roughly 35% in January, as well as similar drops during the big bitcoin price surge in 2017.

“We are definitely close to a bottom” around $ 38,000 to $ 40,000, he said.

Bitcoin bull Mike Novogratz told CNBC on Tuesday that he sees $ 40,000 as a buy level for the digital currency. The investor, who heads cryptocurrency financial services and investment management Galaxy Digital, said he expects bitcoin to consolidate in a $ 40,000- $ 55,000 trading range.

“Then we will have another advantage. And I say this not just by guessing. We see institutions that are moving and it takes a while, ”Novogratz said.

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