Bitcoin pares yesterday's gains on Thursday, sits comfotably above $4000

Following a modest technical correction on Tuesday, bitcoin gained more than $300 on Wednesday to decisively break above the $4000 threshold before going into another consolidation phase on Thursday. As of writing, the BTC/USD pair was trading at $4150, losing 1.35% on the day.

On Wednesday, the digital currency grabbed the investors' attention after a report on CoinDesk claimed that bitcoin was getting ready for another split in late October. After the first split that occurred in August, bitcoin rallied to its record high near the $5000 handle but lost its momentum on China's efforts to tame the cryptocurrency by deciding to ban ICOs (Initial Coin Offerings). "There could be as many as four cryptocurrencies bearing the bitcoin name if a small group of miners and developers carry out a planned fork of the blockchain this month. Led by Jack Liao, CEO of Hong Kong mining firm LightningASIC, bitcoin gold is slated to launch on October 25, with its cryptocurrency being opened to exchanges on November 1," CoinDesk author Alyssa Hertig wrote in a report yesterday.

In light of recent these recent developments, bitcoins retreat on Thursday looks more like a technical correction than anything else. Moreover, investors may be looking to take some profit off the table as we approach the end of the month.

On other news, Viktor Shvets, Macquarie's head of global and Asia-Pacific equity strategy, "the big difference between today’s cryptocurrencies and (say tulips) is that even though bitcoin price could be reflecting extreme speculation, it is built on a durable technology that is likely to continue to evolve and strengthen," told Business Insider on Thursday, undermining JPMorgan CEO Jamie Dimon's comments about bitcoin being a fraud.

Technical outlook

Despite today's drop, the pair is looking to close the day above the 20-DMA, which remains above both the 50 and the 100-DMAs, suggesting that bulls continue to dominate the pair's price action. On the upside, $4380 (Sep. 12 high) could be seen as the initial hurdle ahead of $4700 (Sep. 8 high) and $5000 (psychological level). On the flip side, supports align at $4000 (psychological level), $3650 (Sep. 25 low), $3365 (100-DMA).