Bitcoin prices crash 20% in 3 days; exchanges warn of volatility
The price of bitcoin, the worldwide cryptocurrency and digital payment system, has crashed in three days from a little below $5,000 a unit to $4,030 this morning, a 20 per cent fall. Later in the day, it rebounded to $4,300 a unit.
In India, however, investors are rushing to buy it and domestic prices are at a 20 per cent premium (~3.15 lakh for buying in the morning). Zebpay, the country’s leading bitcoin exchange, issued this advisory to investors: “Due to high demand and low supply of bitcoin, both buy and sell prices are higher in India compared to international prices.” Further cautioning that the prices are volatile. Even as prices in the international market went up, on Indian exchanges too price rose to quote at ~3.35 lakh. However, premiums remained high.
Unocoin, another Indian bitcoin exchange, has said on its website: “Some of the big bitcoin withdrawals to a bitcoin address are being processed manually. Kindly expect a delay of one to two working hours for its processing.”
Bitcoins are not mined in India, due to high electricity and manpower cost. The global price crash is because Chinese regulators (the largest production is in China) took sweeping action against domestic initial coin offerings (ICOs). Exchanges have been told to cease trading of ICO tokens and to issue refunds for select customers.
ICOs are similar to Initial Public Offers of shares, with offerings of token for bitcoin and raising of funds to invest in cryptocurrencies. Such fund raisings are largely unregulated and much more than a billion dollars has been raised through this instrument. The volatility and fast rise in bitcoin and other crypto currency prices has made regulators worried.
Other crypto currencies that have seen a spurt and fall are Etherium and Bitcash. In the three days till Tuesday morning, the total of crypto currencies' market capitalisation fell from $174 billion to $134 bn, before rising to $149 bn. Bitcoin's share is now about 48 per cent.
At the beginning of the current financial year, the price of bitcoin was $1,074 a unit, having risen fourfold in eight months.
Two weeks earlier, Cryptocoinnews.com had quoted Sheba Jafari, a chief technical analyst at Goldman Sachs, saying, “She anticipates that the bitcoin price will continue to rise to a maximum of $4,827 during its fifth wave. However, she said she doesn’t believe that bitcoin will reach $5,000 during its fifth wave. In fact, she expects the price to crash by more than 38 per cent at the completion of the wave.”