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Bitcoin price tumbles 30% – Financial Times

HomeNewsBitcoin price tumbles 30% – Financial Times
Bitcoin price tumbles 30% – Financial Times
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The price of bitcoin tumbled 30 per cent on Friday, with the rout accelerating early in the New York morning, after a week marked by high-profile security problems at two exchanges and warnings from global regulators about the risks cryptocurrencies pose.

Bitcoin plummeted as low as $10,775.92, according to Bloomberg, leaving it more than 45 per cent down from a record high touched at the start of the week. Its crash caps a volatile week for the controversial cryptocurrency that began the year at just $1,000, prompting some to question whether a bubble is bursting.

Other digital currencies also fell on Friday, according to which tracks them. Ethereum, the second-largest cryptocurrency by market capitalisation, was 35 per cent lower at $548.44, while bitcoin doppleganger “bitcoin cash” fell 42.6 per cent.

The moves reverse a surge in prices over the past month, fuelled by the launch of bitcoin futures on the US-based Cboe Global Markets exchange, as parts of mainstream Wall Street try to capitalise on the recent fervour. Rival exchange operator CME Group has also opened trading in bitcoin futures recently

The rise in bitcoin prices has evoked comparisons with the dotcom bubble, intensifying concerns about risks of speculating in the cryptocurrencies.

The Financial Industry Regulatory Authority in the US on Thursday warned investors against “potential scams” following a surge in stock prices of hitherto obscure companies that announce a sudden switch of strategy into cryptocurrencies to tap retail investor enthusiasm for anything related to blockchain, the technology powering bitcoin.

One company, Long Island Iced Tea Corp, announced on Thursday that it was changing its name to Long Blockchain Corp, prompting shares to soar as much as 500 per cent. Earlier in the week, LongFin, a business specialising in trade finance that went public on Nasdaq this month, said it had bought a blockchain-related venture, sending its value up by tenfold.

Mark Carney, head of the G20’s Financial Stability Board and governor of the Bank of England, said on Wednesday that global rulemakers would examine digital currencies and potentially tighten regulations around initial coin offerings, a digital form of fundraising.

In South Korea, the bitcoin exchange Youbit announced on Tuesday that it had been hacked, causing it to lose 17 per cent of its assets and forcing it into bankruptcy. Youbit told investors in a note that they could only withdraw about 75 per cent of their digital currency.

The hack came as San Francisco-based Coinbase, one of the world’s most popular exchanges for trading digital currencies, said it was investigating staff after a sudden jump in the value of bitcoin cash.

On the same day, the Monetary Authority of Singapore issued an advisory on investing in cryptocurrencies, warning people to act with “extreme caution” and to “understand the significant risks”.

There was a sense of angst pervading internet discussion forums on Friday even as some punters suggested holding on for another bounce.

“I seriously hope bitcoin can recover from this nightmare,” wrote a user on one of the main bitcoin boards on Reddit. Another said that “this is really challenging to deal with . . . I’m not sure how much I want to allocate to this dip but I just keep buying”.

Another user said “crypto is pretty volatile, and this latest dip is not totally unexpected”. But the user pointed to market structure issues that have also been flagged by financial industry experts: “What is concerning me is that as our popularity grows, the BTC [bitcoin] network is starting to confirm our concern that it is unable to function at a reasonable rate and fee. The network is getting bogged down by volume and increased transaction fees.”


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