Bitcoin plunges below 13,000 as investors suffer ‘reality check’

Bitcoin prices plunged by a quarter on Friday as investors cashed out just before Christmas after the wildly volatile currency’s stratospheric rise in recent weeks.

The precipitous drop comes after a series of warnings by analysts and governments about a bubble that could burst at any moment as investors, many inexperienced, piled into the unit hoping to enjoy some of the eye-watering gains.

The controversial cryptocurrency fell to $12,191 from its Thursday price of $16,563.

It is down almost 40 percent down from its record high of $19,500 seen on Monday, according to data compiled by Bloomberg.

The sell-off has bled through to other cryptocurrencies such as Dash, Litecoin and Ripple, all of which were sent plunging.

Stephen Innes, head of trading for Asia Pacific at OANDA, said investors are having a “reality check”.

He added: “At the heart of the matter was a frenzied demand for coins with limited supply has now led to unsophisticated investors holding the bag at the top.”

At its height, Bitcoin had soared almost 30-fold since the start of the year and has moved into the mainstream as two major US exchanges began trading futures in the unit. And the mania that has swept the Bitcoin universe saw a New York beverage firm this week announce it was shifting into cryptocurrency-related investments.

Long Island Iced Tea Corp of Farmingdale, New York, which says it produces the soft drink with a proprietary recipe, said on Thursday it was changing its name to “Long Blockchain Corp” and would explore investments in the technology underlying cryptocurrencies.

Shares in the firm rose 180% on Nasdaq following the news.

Bitcoin began looking shaky on Wednesday when it took a 15% hit following news South Korean exchange Youbit had been hacked, leading the firm to say it will start bankruptcy proceedings. South Korea and Japan are home to some of the largest number of traders in the currency.

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