Fasten your seatbelts as Bitcoin takes a dive

LONDON/ TOKYO: Bitcoin plunged below $13 000 yesterday after losing about a third of its value in just five days, with the digital currency on track for its worst week since 2013 after a blistering ascent to a peak close of $20 000 (R254 000) on Sunday.

The biggest and best-known cryptocurrency had seen a staggering twentyfold increase since the start of the year, climbing from less than $1 000 to as high as $19 666 on the Luxembourg- based Bitstamp exchange on Sunday and to over $20 000 on other exchanges.

But bitcoin has fallen each day since then, with losses accelerating yesterday. It fell to as low as $12 560 on Bitstamp, marking a fall of almost 20% on the day.

For the week, it was down around a third, its worst performance since April 2013.

“A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes,” said Charles Hayter, founder and chief executive of industry website Cryptocompare in London.

“A lot of traders have been waiting for this large correction. With the end of the year in sight a lot of investors will be taking profits and saying thank you very much and closing their books for the holiday period,” he added.

Bitcoin has had a difficult week. As warnings about the risks of investing in the volatile and unregulated market have continued to sound louder – with Denmark’s central bank governor calling it a “deadly” gamble – there have been more worries over the exchanges on which cryptocurrencies are bought and sold.

South Korean cryptocurrency exchange Youbit said on Tuesday it was shutting down and filing for bankruptcy after it was hacked for the second time this year.

Coinbase, a US company that runs one of the biggest exchanges and provides digital “wallets” for storing bitcoins, said on Wednesday it would investigate accusations of insider trading, following a sharp increase in the price of a bitcoin spin-off hours before it announced support for it. As rival cryptocurrencies slid along with bitcoin, the total estimated value of the crypto market fell to as low as $480 bil- lion, according to industry website Coinmarketcap, having neared $650bn just a day earlier.

But other cryptocurrencies had surged earlier in the week, with many market- watchers saying investors who felt bitcoin’s price had become stretched were moving into other digital coins.

Ethereum, the second-biggest cryptocurrency by market size, soared to almost $900 earlier in the week, up from about $500 a week earlier. Ripple, the third-biggest, has more than quadrupled in price since Monday.

“A lot of the capital is flowing from bitcoin into alternative coins,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers in Sydney. – Reuters

PICTURE: REUTERS The biggest and best-known cryptocurrency bitcoin has suffered a bruising week, losing a third of its value.