Bitcoin takes a tumble as bubble fears mount
tokyo — 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 eyewatering gains.
The controversial cryptocurrency fell to $10,834 from its Thursday price of $16,563.
It is down almost 40 per cent 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 company this week announce it was shifting into cryptocurrency-related investments.
Bitcoin began looking shaky on Wednesday when it took a 15-percent hit following news South Korean exchange Youbit had been hacked, leading the firm to say it will close and start bankruptcy proceedings. —
london/tokyo — Bitcoin plunged below $13,000 on Friday after losing around 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 to $20,000 on Sunday.
The biggest and best-known cryptocurrency had seen a staggering twenty-fold 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 on Friday. It fell to as low as $12,560 on Bitstamp, marking a fall of almost 20 per cent on the day. At 0850GMT it was trading down 15 per cent on the day at $13,320 and was heading for its worst day in more than three months.
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 is shutting down and is 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 billion, according to industry website Coinmarketcap, having neared $650 billion just a day earlier. But other cryptocurrencies had surged earlier in the week, with many marketwatchers saying investors who felt Bitcoin’s price had become stretched were moving into other digital coins, rather than cashing out entirely.
Ethereum, the second-biggest cryptocurrency by market size, soared to almost $900 earlier in the week, up from around $500 just a week earlier.
Ripple, the third-biggest, has more than quadrupled in price since Monday. —