Bitcoin fell below $40 000 Monday after climbing to its highest level since May over the weekend.
The biggest cryptocurrency lost 4.9% and was currently trading at $39 790 in Hong Kong as of 11:25 AM. Other virtual currencies, including Ether second in rank, also dropped. Analysts believe profit-taking was behind the declines.
Vijay Ayyar is the head of Asia Pacific at crypto exchange Luno in Singapore. He said that this is “just a normal pullback after bullish action.”
Bitcoin is now back at the top of a $30 000-$40 000 trading range, which has been in place since May’s cryptocurrency rout. Recent weeks have seen support comments from Elon Musk, a billionaire, and Ark Investment Management’s Cathie wood. There has also been speculation about Amazon.com’s potential involvement in the cryptocurrency market.
The industry is also under increasing scrutiny. This includes the push by US legislators to tighten rules for cryptocurrency investors to collect higher taxes to finance a portion of a $550 billion investment in transportation and power systems.
A software update to the Ethereum network is also expected this week, which crypto traders expect. This could increase Ether’s value by reducing the rate at which token supply increases.