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Bitcoin falls more than 4 percent to less than $9,000

Bitcoin fell below $9,000 for the first time in two weeks on Friday, a drop of 4.4 percent. Even so, at $8,800 Bitcoin is worth more than twice what it was at the beginning of the year. The leading cryptocurrency saw a $2,000 surge in October after an announcement from Chinese President Xi Jinping that his country now regarded blockchain as a “core” technology, revealing hundreds of blockchain projects already underway in China.

But China’s embrace of blockchain is not necessarily a boon for Bitcoin, as Digital Asset Research co-founder Greg Cipolaro explained.

“My opinion is that that wasn’t the right read of that news,” Cipolaro said, according to Coindesk. “They were clearly saying blockchain not bitcoin. … You really haven’t seen follow-through on the price. There hasn’t been a major catalyst post that $2,000 rip two weeks ago.”

Analysts are warning that the recent dip is the beginning of a downward trend. According to an assessment in Bloomberg:

“The GTI Vera Convergence Divergence Indicator shows a narrowing gap between the signal and vera lines, which suggests a trend change may be on the horizon. If this occurs, the largest digital currency could retest the lows seen before its rampant run following comments by China’s President Xi Jinping in October.”

Predictably, gold advocate and crypto skeptic Peter Schiff seized on Bitcoin’s sudden drop, arguing that “it looks like the Bitcoin pump is finally over” and advising people to “get ready for the dump.” Schiff later asserted that “Bitcoin is never going to hit $100,000.”

NekoZ, a popular Bitcoin analyst on Twitter, put it this way:

“Bullish volume looks extremely weak, I expect a drop down still. Bloody Mondays are typical, which would coincide with this further drop. HTF I am still bearish, not as much as before but still bearish.”

Will Bitcoin and other cryptos gain from a destabilized global market?

Bitcoin absorbed a wider share of the cryptocurrency market in the midst of another week of dramatic fluctuations. Bloomberg reports that the leading cryptocurrency now owns nearly three-quarters of the market:

“Its market capitalization is above $211 billion, 10 times that of the next-largest digital asset, Ether. And in a week when traditional financial markets were roiled, its price has held up, too: Bitcoin rose 14% over the seven days through Friday, while prices for alternative assets including Ether and XRP dropped.”

As I write Bitcoin is trading at about $11,400, according to Coin360. CoinTelegraph reports that its price fell roughly $400—from $11,800 to $11,400—between 7:30 and 7:45 Saturday morning. Meanwhile, “Ether (ETH) is holding onto its position as the largest altcoin by market cap, which currently stands at $21.9 billion. The second-largest altcoin, Ripple’s XRP, has a market cap of $12.45 billion at press time.”

Yoni Assia, co-founder and CEO of online trading platform EToro, told Bloomber in a recent interview that the altcoin market should be approached with extreme caution, given its volatility.

“As much as Bitcoin was a risky asset class, I think alt coins are significantly riskier,” he said. “A lot of people got burned or had a bad experience during crypto winter.” He added that some altcoin investors saw their values plunge by up to 90%. Crypto winter refers to a brief period of time toward the end of 2018 which saw digital assets sold off in rash, erratic fashion.

Some analysts are suggesting that Bitcoin has profited, and will continue to profit, from the anxiety and uncertainty triggered by the ongoing trade war between Washington and Beijing, the end of which doesn’t appear to be anywhere in sight. Given Bitcoin’s independence, more investors are turning to it.

“Are people buying Bitcoin because it’s a speculative asset class and borrowing is now cheaper?” Bloomberg quotes David Martin, chief investment officer at Blockforce Capital, as inquiring. “Or [because] there’s a lot of global uncertainty and this caught a lot of traders and asset managers off guard so they’re flocking to an uncorrelated asset right now? You can make an argument for both right now.”