Has bitcoin bubble popped?
Bithumb closes branch amid falling virtual coin prices
With bitcoin continuing to lose ground, there is growing pessimism about the future of cryptocurrencies.
Some believe that the bitcoin bubble has already burst, expecting the price of the most popular digital coin will either hover around $3,500 or drop further.
Bitcoin prices, which once peaked at over 21.7 million won ($19,310) per coin, plunged to the $3,500 level at the dawn of the New Year.
Bithumb, once the world’s largest crypto exchange in terms of daily trading volume that symbolized the so-called “bitcoin craze,” has recently shut down its branch in central Seoul.
A Bithumb official said last week that the crypto exchange integrated the Gwanghwamun branch with its head branch in Gangnam, southern Seoul, to “more efficiently” cope with customer demand.
With the decision, it stopped operating its Gwanghwamun branch Jan. 11 and relocated its two workers to the Gangnam branch. Now, Bithumb operates three branches: in Seoul, Daejeon and Busan.
“The daily trading volume has now diminished to nearly one 30th compared to its heyday in December 2017,” a Bithumb official said. “Now, there are not many new investors entering the crypto market. We have decided to integrate the two branches into one to improve efficiency.”
According to virtual coins researcher coinmarketcap.com, the price of bitcoin peaked at $19,310 per coin on Dec. 17, 2017, but crashed to $4,100 per coin as of Dec. 1, 2018. It was worth $3,590 per coin Jan. 16.
Other major virtual coins such as Ethereum and Ripple also suffered nearly a 90 percent decline in coin prices compared to their highs.
The U.S. Federal Reserve Bank of St. Louis said in a recent research note that too many virtual coins were introduced following bitcoin’s takeoff. Now, there are more than 3,000 cryptocurrencies on the market.
“Investors have completely lost their confidence in future virtual coin prices,” said futures trader surnamed Lee.
“There is no doubt cryptocurrencies won’t enjoy a December 2017 rally. Not many investors in Korea now consider them as an investment source. Prices will remain at current levels.”
There are also a series of events that dealt a blow to confidence in cryptocurrency trading.
In December, another major crypto exchange in Korea, Upbit, was suspected of manipulating its data processing system to rake in more than 120 billion won while falsifying 254 trillion won worth of fake orders to inflate the exchange’s trade volume.
The Seoul Southern District Prosecutor’s Office indicted two top-level officials and one employee without detention on the charges.
In a bid to overcome the current market downturn, Bithumb said it appointed Choi Jae-won as its new CEO, Jan. 9.
The appointment suggests that the crypto exchange is likely to aim at making inroads into foreign markets since Choi has proven his quality in overseas businesses.
Choi joined Bithumb last February after working about 13 years for Barclays in the U.K., and has since led the exchange’s overseas operations.
Under his leadership, Bithumb clinched a partnership with an American fintech company to establish a token exchange for securities firms in the U.S.
“I will do my best to establish a future growth engine to overcome the current difficulties,” Choi said.