Crypto craze cools as bitcoin dives again
BITCOIN believers had their faith tested again as the digital currency’s value crashed back below the $30,000 mark.
The crypto slid by 3pc to trade at $29,785 last night as it failed to recover from a sell-off that struck most financial markets on Monday.
But when bitcoin falls, others follow. And sure enough, rival coins such as ethereum, cardano and dogecoin also tumbled.
The dip below $30,000 means bitcoin’s gains so far this year have been all but wiped out and are now just 2pc higher than the start of 2021. It reached an alltime high of $64,829 in April in a rally that began running out of steam in June.
Around that time Elon Musk, who had boosted bitcoin with plans to accept it as a way of payment for Tesla cars, knocked the price when he U-turned on the decision, claiming the crypto-currency is too energy-intensive. And crackdowns in China and against trading platforms have hit it further.
Set up in 2009, bitcoin was launched as an alternative to traditional money, aimed at being a digital, decentralised currency that would not rely on central banks. During the spring rally, major investment houses said bitcoin could climb above $100,000 in the foreseeable future.
And earlier this week billionaire investor Tim Draper this week stuck by his $250,000 price forecast for next year. But the optimism among many analysts is fizzling with the price drop.
CMC Markets’ Michael Hewson said the move below $30,000 was ‘potentially opening up the prospect of a move towards $25,000’.
While bitcoin failed to rebound from Monday’s horrors, stock markets broadly gained.
Fears about the rapid spread of the Delta variant – particularly in countries that have low vaccine rates – weighed on shares in London and the wider world.
But yesterday the FTSE 100 closed up 0.5pc, or 36.74 points, at 6881.13, while the FTSE 250 climbed 0.8pc, or 178.6 points, to 22119.48. In the US, the Dow Jones, Nasdaq and S&P 500 all rallied into the close.
Danni Hewson, AJ Bell financial analyst, said: ‘Certainly London markets have made modest steps today, but the FTSE100 has remained steadfastly below that 7,000 mark.
‘No boomerang effect here rather a cautious stabilisation highlighted by the mishmash of sectors topping the list of risers.’
Topping the Footsie leaderboard was plane engine maker RollsRoyce. It rose 3.5pc, or 3.02p, to 90.02p after Citigroup analysts said they were upbeat about its prospects and said it was an appealing long-term investment.
Brokers admitted they do not know when long-haul flights will be back at normal levels – but said that when they do Rolls will ‘recover faster’ than its peers.
Rolls was also boosted by reports that it and Babcock International were looking to sell their stakes in Air Tanker, an aircraft leasing company that leases out tanker planes to the army. The two companies own about half of Air Tanker, though it is unclear what their stakes are worth.
Babcock International rose 1.1pc, or 3.1p, to 286.2p.
Numbers from Anglo American (up 0.7pc, or 20p, to 2800p) suggested the diamond industry is thriving again as it ramped up production by 134pc in the most recent quarter, compared with last year. The amount of platinum group metals and copper it mined was also higher. And peer BHP (up 1.9pc, or 41p, to 2188p) said it saw record iron ore production in the year to June. Reports also circled that it is considering selling its oil and gas business.
On the junior market, building materials supplier Lords Trading Group had a successful first day of trading.
It went public at 95p, valuing it at £150m, but shares closed the session at 100p.