One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make sure their cost basis is zero going forward."

In retrospect this appears to have been warranted because overnight the bitcoin buying appears to have finally stumbled, and after hitting $785 just a few days ago, the digital currency tumbled over 10% earlier, and as of this moment was trading at around $640, which incidentally is where it was trading just ten days ago.

There was no immediate catalyst for the resent drop, although if Chinese trading has been the reason for the recent surge, it is just as likely that Chinese traders, who are known to turn on a dime, simply became sellers as they chased the new momentum this time lower. Also worth noting: while rapidly closing, the Chinese bitcoin premium is still present and was about 4% higher than the coinbase price.

Ironically, the move lower takes place at the same time as the Winklevoss twins, sensing renewed excitement about the digital currency, told CNBC that they are expanding Gemini, the cryptocurrency exchange founded by the duo, into the U.K.

Cameron and Tyler Winklevoss launched Gemini in October after the New York State Department of Financial Services allowed it to operate in 31 U.S. states and in Washington, D.C. The company allows people to buy and sell the digital currency bitcoin and its rival ether. In May, Gemini became the world's first licensed ether exchange. Ether is a digital currency similar to bitcoin which runs on the Ethereum blockchain. One ether is currently worth around $11.46 and it has a total market cap of around $959.1 million. Bitcoin in contrast is worth $751.89 with a market cap of $11.7 billion. But ether is seen as a potential successor to bitcoin with the underlying Ethereum blockchain able to carry out so-called "smart contracts" – a contract that is able to execute itself when certain conditions are met. Ethereum has recently been involved with a number of banks to trial the use of its blockchain for financial transactions.

Tyler Winklevoss concluded that "if we look at the overall market cap of bitcoin … if it is really a gold 2.0 … then the market cap is actually quite small and there is potential for a lot more increase in the price because you look at gold and the market cap is trillions of dollars. Although bitcoin has been appreciating quite significantly over the last two weeks, there still seems like it's really early and undervalued and potentially a lot of room to appreciate,"

That may have marked an interim top.

That said, those who do not wish to sell may also be right: after all, Chinese capital outflows will only accelerate and bitcoin will gain ever greater prominence as a method of bypassing Chinese capital controls. Additionally, Trace Mayer, an Austrian economist and an investor in various Bitcoin startups including Bitpay, Armory, and Kraken, has stated in a recent interview that the price of bitcoin could very possibly reach US$3,000 after the bitcoin block reward halving takes place in mid-July.

Mayer, who has been involved with the bitcoin industry’s most prominent digital currency companies, explained that as it did during the previous halving, the price could go up to a range between US$2,500 to US$3,000. “When we had the halvening happen last time, it was US$7 and it ran all they way up to US$266 over a period of couple months,” said Mayer during the interview. “This time around, we’re looking at a 10x increase in price. We’re looking at it going from US$300 to US$3,000 per bitcoin,” he added.

However, he emphasized that the price of bitcoin could be affected by several factors, one of which includes the failure of a major exchange.

“Who knows what will happen. Maybe we have a failure of a major exchange and the price will tank again. Who knows what the future holds for us,” he concluded.

Indeed: "who knows" - based on bitcoin's history, it is possible that it does indeed hit $3000, just as it is possible that it tumbles back to $300 before resuming its upward climb as the Chinese storm back. As always, and especially when dealing with something as ephemeral as a "digital currency", one should only risk as much as one is willing to lose.