Bitcoin is currently hovering above a two-year low after crashing in price by more than 5 per cent over the last 24 hours.
The return to $18,000 follows nearly 10 months of declining prices, which have seen bitcoin lose more than 70 per cent of its value and the overall cryptocurrency market fall by roughly $2 trillion.
Crypto commentators have blamed the latest crash on uncertainties surrounding the expected speech from US Federal Reserve Chairman Jerome Powell on Thursday and the potential reaction from investors relating to a rate hike.
The arrival of the highly-anticipated Ethereum Merge this month, which will see the second largest cryptocurrency transition to a more environmentally-friendly blockchain, could also be a factor causing investors to switch to the more versatile rival.
“Besides the macroeconomic constraints, the events in the crypto market, and particular sentiments surrounding the forthcoming Ethereum Merge might also be having their toll on BTC,” Fuad Fatullaev, co-founder and CEO of the Web3 platform WeWay, told The Independent.
“Institutional investors might embrace the chain against bitcoin in the long term as they are poised to see the new Ethereum protocol post-merge as a more environmentally friendly one.”
Mr Fatullaev warned the negative trend could continue down towards $15,000 if bitcoin fails to attract buyers in the short term.
In contrast, Ethereum (ETH) has seen significant gains in recent months, causing bitcoin’s market dominance to fall to near-record lows.
A research note from the Luno cryptocurrency exchange described the $18,000 price point as a “critical support level” for bitcoin.
The latest dip remains within the $17,500-$23,000 price range that bitcoin has been trading within since June, and falling out of it may result in an even broader sell-off.
“This is a difficult and choppy market to trade actively, and it may be prident to avoid any directional bets at the moment and wait for a trend to emerge,” Luno’s note stated.