After climbing to its highest level since May, Bitcoin fell to $40,000 and then recovered.
After dropping 5.6% Monday, the largest cryptocurrency dropped 4.8% to $39.280 at 8:42 AM in New York. Other virtual currencies, including Ether’s 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 drawback 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 crash. On Sunday, it reached $42,605, the highest level since May. It rose almost 20% last week, marking the largest increase in three months.
Recent weeks have seen the token benefit from supportive comments by billionaire Elon Musk, Ark Investment Management LLC’s Cathie wood, and speculation about Amazon.com Inc.’s potential involvement in the cryptocurrency market.
The industry is also under increased scrutiny. This includes the push by U.S. 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.