Bitcoin has declined sharply this week, losing over 5% in under 24 hours and causing traders to nervously eye the psychological $10,000 per bitcoin level.

The bitcoin price lost $1,000 in a matter of hours, falling under $11,000 per bitcoin on Thursday morning with the U.S. stock market posting its biggest sell-off since June by the close of play as stocks retreated from all-time highs, led lower by tech giants.

Bitcoin and cryptocurrency market watchers, who have enjoyed a prolonged bull market since the March coronavirus crash, are now focused on the $10,000 line, with a bitcoin futures trading gap set in late July still open just below it.

The bitcoin price lost almost $1,000 per bitcoin in under 24 hours, sparking fears among bitcoin and ... [+] cryptocurrency traders of a wider sell-off.

Bitcoin's 2020 bull market, which has seen the bitcoin price surge from around $4,000 to $12,000, could be brought to an abrupt end if the price moves lower than $10,000 per bitcoin.

"Moving forward, it is important to keep an eye on the last zone of defense between $10,000 and $10,500," Joe DiPasquale, the chief executive of San Francisco-based bitcoin and crypto hedge fund BitBull Capital, said via email. "As long as this range is respected, bitcoin is unlikely to see a prolonged bearish spell."

The bitcoin price fell as low as $10,455 per bitcoin on the Luxembourg-based Bitstamp exchange on Thursday before somewhat rebounding.

The open trading gap, set on July 27, saw bitcoin futures on the Chicago Mercantile Exchange (CME) open higher after the weekend close, something some analysts think causes a disconnect with the underlying market and appears to have set bitcoin on its path to recent highs of around $12,000. Technical analysis shows that 90% of such trading gaps are eventually closed, with the price sooner-or-later retracing back to the gap.

Elsewhere, bitcoin and cryptocurrency exchange data suggests there could still be "sell pressure to work through," according to Philip Gradwell, chief economist at blockchain intelligence firm Chainalysis.

"Bitcoin inflows to exchanges were 92,000 yesterday, highest in 37 days, as people rushed to sell at near $12,000 prices of September 1," Gradwell said via Twitter. "Trade intensity, how many times the inflowing bitcoin was traded, is low, suggesting there were not many buyers to match the sellers."

Meanwhile, bitcoin miners, those who secure the cryptocurrency's network in return for bitcoin rewards, "are moving unusually large amounts of bitcoin," according to analysts at data provider CryptoQuant, suggesting miners are looking to cash out their bitcoin rewards.

"The big level that everyone is watching is $10,000," Mati Greenspan, the founder of Quantum Economics, wrote in his popular daily newsletter, pointing to a U.S. dollar comeback as the reason for the recent move lower.

"The crypto market has broken a few psychological levels. When we broke above that level in late July, it was with such force that we never really got to test it as support. Well, this may just be our chance," Greenspan wrote, adding, "if things get really bad we may just get another chance to buy bitcoin below $10,000."

The bitcoin price has lost almost 6% over the last 24-hour trading period, with the bitcoin market ... [+] capitalization falling under $200 billion.

However, many in the bitcoin and cryptocurrency community remain upbeat despite the recent bitcoin price fall.

"$10,000 is the new $1,000," Charles Hayter, chief executive of bitcoin and cryptocurrency analytics platform CryptoCompare, said via email, adding: "2020 has seen leaps and bounds in terms of infrastructure, regulation and resilience across the ecosystem as it has evolved over the last three years."

The current bitcoin market is "similar to the first half of 2017," according to Hayter, who thinks "the perpetual dilution of fiat currencies is being challenged by bitcoins hard code cap" of 21 million bitcoin tokens.

Bitcoin, along with the wider cryptocurrency market and global stock markets, has been boosted this year by massive stimulus measures and unprecedented money printing that's carried out by the world's central banks, led by the U.S. Federal Reserve, in order to offset the economic damage wrought by the coronavirus pandemic.

"For most of 2020, short-term bitcoin price moves have been highly correlated to U.S. stocks," Cory Klippsten, the chief executive of bitcoin buying app Swan Bitcoin, said via Telegram, adding he expects "any dips under $10,000 to be bought up voraciously."

"Bitcoin has proven to be uncorrelated over the longer term. At a minimum it is a hedge against fiat inflation, but it also functions as a call option on a new global monetary system."

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If Bitcoin Crashes Below $10,000 Its All OverHeres Why - Forbes