Bitcoin Is Falling Fast, Losing More Than Half Its Value in Six Weeks
Selloff triggered by expanding regulatory crackdown on cryptocurrencies
Bitcoin plunged below $8,000 on Friday, extending its sharp rout since the start of the year in a selloff triggered by a widening regulatory crackdown on cryptocurrencies.
In afternoon trading in New York, bitcoin had recovered to about $8,700, down 4.8% on the day after slipping below $7,700 shortly before 8 a.m. That was the lowest level since November.
At its low point, the digital currency had fallen about 60% from a record high of $19,783 in December, according to research site CoinDesk Inc. That marks bitcoin’s third biggest drop over the past five years: It fell 76% in the spring of 2013, and 85% from November 2013 to January 2015.
Bitcoin’s sharp swings illustrate just how much the digital currency remains a highly illiquid and volatile investment, particularly relative to stock, bond or currency markets.
In its nine-year history, it has had five peak-to-trough declines of more than 70% apiece, said Charlie Bilello, director of research at New York advisory firm Pension Partners. It fell 94% in less than a month in 2010—and again over a five-month stretch in 2011—but both times bounced back.
The recent decline in some regards feels more severe, as the magnitude of the dollar price drop offers a dose of reality to new investors who poured money into cryptocurrencies during last year’s frenzied rally. Many were drawn to the prospect of investing in currencies outside the control of central banks and governments, but now are having to succumb to market forces.
Bitcoin biggest bubble in history, says economist who predicted 2008 crash
The economist credited with predicting the 2008 global financial crisis said a 12% fall in the value of bitcoin on Friday was the latest proof that the cryptocurrency was the biggest bubble in history and destined for a crash.
Nouriel Roubini, professor of economics at New York University, said bitcoin was “the mother of all bubbles” favoured by “charlatans and swindlers” as it fell below $8,000 (£5,600) early on Friday, marking a 30% drop since the beginning of the week as investors became increasingly twitchy about a clampdown on cryptocurrencies by regulators. Later it rallied, climbing back over $8,600 by 3pm (GMT).
Bitcoin has lost more than half its value since hitting a peak of near $20,000 in the week before Christmas. Dubbed “Dr Doom”, Roubini said the sharp fall was the beginning of a crash that would see the value of the digital currency plummet “all the way down to zero”.
The latest sell-off follows reports that US regulators are investigating whether the spike in the price of bitcoin in 2017 was the result of market manipulation. India’s finance minister said the country did not recognise the cryptocurrency as legal tender, pledging to fight their use for “illegitimate activities”.
Just another ” Get Rich Quick ” scheme.