Bitcoin falls off another cliff as cryptocurrency slump deepens

HONG KONG: Cryptocurrencies dropped sharply for the second time in less than 24 hours, sinking toward a nine-month low amid concern that broader adoption of digital assets will take longer than some anticipated.

Bitcoin, the largest cryptocurrency, tumbled as much as 9.8% and was trading at US$6,422 as of 1:25 pm in Hong Kong, according to Bloomberg composite pricing.

The Bloomberg Galaxy Crypto Index, a gauge of the largest digital assets, traded near its lowest level since November 2017 as rival coins Ripple, Ether and Litecoin also fell.

Cryptocurrency bulls who counted on an expanding user base to drive up prices have been dealt a string of recent disappointments.

Business Insider reported on Wednesday that Goldman Sachs Group Inc was pulling back on near-term plans to set up a crypto trading desk, while trading platform ShapeShift AG said on Tuesday that it will begin asking users for personal information – a policy that may drive away customers who value anonymity.

The moves follow last month’s decision by US regulators to reject another round of Bitcoin exchange-traded fund proposals.

“A lot of retail investors’ hopes for a bigger institutional presence were really being driven by Goldman Sachs,” Stephen Innes, head of trading for Asia Pacific at Oanda Corp, said by phone from Singapore. “This is just a negative, negative sign as far as liquidity goes.”

While many banks and institutional investors are dipping their toes into the world of cryptocurrencies, concerns about everything from money-laundering to market manipulation and unclear regulations have prevented widespread adoption.

The market value of virtual currencies tracked by CoinMarketCap.com has slumped about 75% from its January peak to US$204bil.

The next key level to watch for Bitcoin is US$5,000, according to Innes, who said a drop below that threshold may cause losses to accelerate. — Bloomberg