Bitcoin plunge deepens beyond 20 per cent shaking faith in crypto boom


NEW YORK (Bloomberg): A steep selloff in Bitcoin is fueling concern that the cryptocurrency bubble may be about to burst.

Bitcoin slid as much as 26 per cent over Sunday (Jan 10) and Monday in the biggest two-day slide since March. After dropping as much as 20 per cent during New York trading hours on Monday, the price continued to fluctuate wildly. Bitcoin has wiped out about US$185 billion in value since Friday, more than the market capitalization of 90 per cent of individual companies in the S&P 500.

"It's to be determined whether this is the start of a larger correction, but we have now seen this parabola break so it might just be," said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.

Bitcoin has more than quadrupled in the past year, evoking memories of the 2017 mania that first made cryptocurrencies a household name before prices collapsed just as quickly. Prices almost reached US$42,000 on Jan 8 with retail traders and Wall Street investors clamoring for a piece of the action.

"It was a parabolic move," said Matt Maley, chief market strategist at Miller Tabak + Co. "What happens with all parabolic moves? You see severe corrections. "While Mr Maley sees Bitcoin moving much higher over the long term, it will still experience severe corrections along the way, he said.

"It will still have big declines of anywhere from 30-60 per cent," he said. "And it's going to happen more than once."

Bitcoin slid 13 per cent to around US$33,159 as of 1:36pm in New York on Monday. Other coins including Bitcoin Cash, Ether and Litecoin fell even more.

"Time to take some money off the table," Scott Minerd, chief investment officer with Guggenheim Investments, said in a tweet from his verified Twitter account. "Bitcoin's parabolic rise is unsustainable in the near term." In late December, Minerd predicted Bitcoin could eventually reach US$400,000.

True believers in Bitcoin argue the rally this time is different from past boom-bust cycles because the asset has matured with the entry of institutional investors and is increasingly seen as a legitimate hedge against dollar weakness and inflation risk. Others worry that the rally is untethered from reason and fueled by vast swathes of fiscal and monetary stimulus, with Bitcoin unlikely to ever serve as a viable currency alternative.

With so many investors wanting to get rich on Bitcoin, the asset is drawing the attention of regulators. On Monday, the UK's financial watchdog issued a stark warning for consumers looking to profit from crypto: be ready to lose everything.

"Investing in crypto assets, or investments and lending linked to them, generally involves taking very high risks with investors' money," the Financial Conduct Authority said in a statement.

The FCA's concerns include price volatility, the complexity of products offered and the lack of consumer protection regulation around many of the products.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Bitcoin , plunge

   

Did you find this article insightful?

Yes
No

100% readers found this article insightful

Next In Aseanplus News

Tapir wanders into school in Kuantan as students sit for SPM paper
Asean News Headlines as at 7pm on Thursday (Feb 25)
Supporters of Myanmar military coup rampage in Yangon (Update)
Fatal abuse of Myanmar maid: Singapore govt to review three areas to ensure it doesn't happen again
Indonesia hunts for missing after mine collapse kills six (Update)
One week with no new Covid-19 cases in Brunei
Laos ministry seeks to reduce number of child workers
New Zealand and Vietnam boost agricultural ties
Indonesia starts mass vaccination for journalists
US applauds improving labour conditions in Cambodia

Stories You'll Enjoy


Vouchers