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The latest selloff in Bitocoin has brought the cryptocurrency closer to the levels seen in May. This has led to questions on how low the cryptocurrency can fall, with some analysts predicting $20,000 levels.

Bitcoin has dropped about 7 per cent this week, and was trading at about $34,200 on Wednesday. Further weakness in the cryptocurrency can lead to a fall to $20,000, as per some of the analysts.

Bitcoin is dangerously approaching $30,000 level and a break of $30,000 could see a tremendous amount of momentum selling, Bloomberg quoted Oanda Corp Senior Market Analyst Edward Moya as saying.

If the cryptocurrency drops further from its current levels, it can possibly fall to $20,000 levels, as per Evercore ISI Technical Strategist Rich Ross and Tallbacken Capital Advisors' Michael Purves, the news agency said.

Tesla CEO Elon Musk calling cryptocurrencies "energy-intensive" and not environment friendly led to a rout in the digital currencies last month. Besides, Musk's announcement that Tesla will no longer accept Bitcoins, and China's action on the crypto front also led to the fall in cryptocurrencies.

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China proscribed financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors against speculative crypto trading.

US Federal Reserve chief Jerome Powell also turned up the heat on cryptocurrencies last month, saying they pose risks to financial stability, and indicated that greater regulation of the increasingly popular electronic currency may be warranted.

However, not everyone is bearish on Bitcoin, with many confident about the long-term outlook.

On Wednesday, El Salvador became the first country in the world to officially grant legal tender status to Bitcoin. Meanwhile, US-based MicroStrategy Inc, a major bitcoin corporate backer, on Tuesday said it was offering $500 million in bonds, and the proceeds will be used to buy Bitcoins.

Irrespective of Bitcoin value, industry experts recommend building a long term portfolio by investing in cryptocurrencies in a disciplined manner via SIP, like in mutual funds.

Also read: Cryptocurrency market crashes! Is it time to sell Bitcoin?

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Bitcoin selloff: Will the cryptocurrency drop to $20,000? - Business Today