Bitcoin bulls wonder where's the bottom after volatility returns

Bitcoin advocates are asking how low will we go from here as the world’s largest cryptocurrency continued to slump following its biggest one-day loss in eight months.

The digital token fell 3% to $5386 as of 8:01 am in New York, having plunged through a key resistance level hours earlier.

Many of Bitcoin’s closest peers also slid on Thursday, while Bitcoin Cash, which will split today into two coins, was little changed.

As the dust settled a day after the Bloomberg Galaxy Crypto Index’s 15% tumble, speculation over its causes includes today’s debut of the new version of Bitcoin Cash. Traders are mulling whether the coin, which itself broke off the original Bitcoin in 2017, is sucking investment and miners away from the largest crypto.

"The Bitcoin Cash hard fork is proving far more destabilising than initially thought as numerous competing factions muddy the landscape," Stephen Innes, head of trading for Asia Pacific as Oanda, said in a note.

Oanda’s Innes said the disruption over the new Bitcoin Cash fork has created too much "noise" that triggered a "when in doubt get out' cause and effect. He said an eventual break below $5 000 for Bitcoin "opens the door to a test of $2 500 as Bitcoin retail traders move from buying on dip to full-out panic mode."