Bitcoin bubble seems close to bursting after value plummets below US$8,000 before climbing back up
Bitcoin whipsawed investors, falling below US$8,000 for the first time since November before recovering most of the day’s losses, as a miserable 2018 continued for cryptocurrencies, with investors confronting a mounting list of concerns about the future of the industry.
Since reaching a record high of US$19,511 on December 18 soon after the introduction of regulated futures contracts in the US, bitcoin has wiped out more than half its value amid waves of negative news.
Setbacks included escalating regulatory threats from authorities around the world including India, South Korea, China and the US, a record US$500 million heist at Japanese exchange Coincheck Inc., fears of price manipulation and Facebook’s ban on cryptocurrency ads.
Japanese authorities raided Coincheck’s offices on Friday morning, a week after the robbery, hauling out documents and computers as evidence. The inspection was conducted to ensure security for users, Finance Minister Taro Aso said.
“Bitcoin is in trouble,” Lukman Otunuga, a research analyst at foreign exchange broker Forextime Ltd, wrote in a note Friday.
“Price action suggests that bears are clearly in control, with further losses on the cards as jitters over regulation erode investor appetite further.”
The largest digital currency dropped as much as 16 per cent to US$7,643, before trading at US$8,715 in New York, according to consolidated Bloomberg pricing.
Bitcoin is down 21 per cent on the week. Rival coins Ripple, Ether and Litecoin tumbled at least 18 per cent as losses continued to spread across cryptocurrencies.
Nouriel Roubini of Roubini Macro Associates said bitcoin is the “mother of all bubbles,” and its bubble is now bursting, speaking in an interview on Bloomberg Television.
He said “virtually every” Group of 20 country is talking about cracking down on the phenomenon as policymaker worries grow.