Bitcoin price collapse set to continue, cryptocurrency analysts warn

Bitcoin has experienced a modest price recovery following weeks of heavy losses, though market analysts warn the collapse may not yet be over.

The cryptocurrency briefly fell below $3,300 (£2,600) on Friday – taking it to its lowest value since August 2017 – but returned above $3,500 over the weekend. Less than a year ago, bitcoin was trading at close to $20,000.

It is not the first time in bitcoin's 10-year history that it has seen such losses, leading experts to speculate how much further it might fall.

"In the past nine years, the cryptoasset market experienced five major corrections with an 85 per cent drop in value on average," Mati Greenspan, a senior market analyst at the online trading platform eToro, told The Independent.

"On this occasion, for bitcoin to record the same 85 per cent drop, its price would have to fall to $2,950."

The latest prediction comes amid widespread speculation concerning the future of bitcoin and other leading cryptocurrencies like ethereum and ripple.

Noted investor Bobby Lee, who co-founded the Hong Kong-based bitcoin exchange BTCC, also pointed to previous market patterns to indicate what direction the price may go.

Mr Lee suggested in a series of tweets that bitcoin could fall by another £1,000 before seeing a strong recovery.

"If history repeats perfectly, then the current bear market for #Bitcoin would bottom out at $2,500 next month, in Jan 2019," he tweeted.

"And then the next rally would start in late 2020, peak out in Dec 2021 at $333,000, and then crash back down to $41,000 in Jan 2023."

It is not the only optimistic price forecast from a prominent figure in the cryptocurrency space, with Blockstream founder Adam Back recently suggesting that future gains will take bitcoin to more than 100-times today's value.

Responding to Mr Lee on Twitter, he said: "Personally I consider $250k-$500k/BTC plausible in the years ahead."

Both men suggest a combination of factors may contribute to the market turnaround, including increased institutional interest, greater regulatory oversight and more widespread adoption.

However, other analysts have previously suggested the cryptocurrency industry is still in the 'Wild West' stages of its development and therefore another digital currency could come in and topple bitcoin.

Whether this happens or not, advocates are hopeful that cryptocurrencies won't be going away any time soon.

"Institutions and governments alike are beginning to accept that cryptocurrencies are likely to become an integral part of the financial system," said Herbert Sim, chief commercial officer of the cryptocurrency exchange Cryptology.

"Regardless of price moves, it's clear that the cryptocurrency community is here to stay, with institutions offering new modes of trading such as options, futures and trading on margins."