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Bitcoin continues to plunge after big run-up
Bitcoin, the best-known digital currency that had jumped more than 400% this year, has lost a third of its value since the beginning of September as investors run for cover after fears of a crackdown on the cryptocurrency in China proved correct.
Bitcoin also has been buffeted by negative comments from Wall Street giants such as J.P. Morgan CEO Jamie Dimon, who on Tuesday said bitcoin was a “fraud,” and Mohamed El-Erian, chief economic adviser at Allianz, who told CNBC on Wednesday that bitcoin should be valued at half or a third of where it is now trading.
Bitcoin, which is seen as an alternative to official currencies such as the dollar and Japanese yen as well as a haven-type asset such as gold, swooned more than 13% on Thursday to $3,391 after BTCC, an exchange in China that trades the cryptocurrency, said in a tweet it will shut down at the end of the month, confirming worst-case fears of bitcoin fans. Chinese authorities have been spooked by the speculative nature of bitcoin, as well as its use as a way for capital to flee the country, which Beijing wants to avoid. OKCoin and Huobi, China’s other two major bitcoin exchanges, also are in the government’s crosshairs but for now are still trading bitcoin.
Since hitting an intraday high of $4,802.74 on Sept. 1, according to Dow Jones, bitcoin has plunged 30%. The drop highlights how volatile this new currency is and why it is viewed suspiciously by many on Wall Street.