NEW YORK: Bitcoin prices plunged by more than 20% on Friday as investors cashed out just before Christmas following the wildly volatile currency’s stratospheric rise in recent weeks.
The precipitous drop came after a series of warnings by analysts and governments about a bubble that could burst at any moment as investors, many inexperienced, piled into the unit hoping to enjoy some of the eye-watering gains.
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The controversial cryptocurrency, which is not backed by any central bank, stood at $12,840 near 18:15 GMT from its Thursday price of $16,563.
That was a decline of more than 30% from its record high of $19,500 on Monday, according to data compiled by Bloomberg. After starting the year near $1,000, the digital currency soared to $10,000 in late November, and nearly doubled that just a couple weeks later.
The sell-off has bled through to other cryptocurrencies such as dash, litecoin and ripple, all of which were sent plunging.
Stephen Innes, head of trading for Asia Pacific at OANDA, said investors are having a “reality check.”
“At the heart of the matter was a frenzied demand for coins with limited supply has now led to unsophisticated investors holding the bag at the top.”
One of the largest bitcoin trading platforms, Coinbase, halted trading for more than two hours on Friday, citing “today’s high traffic.” But the service was restored around 18:45 GMT. Some analysts attributed the plunge to profit taking, while others said the drop was just another sign of the inherent volatility in the asset.
“There’s no catalyst in particular for the drop,” said Alexandre Baradez, analyst for IG France. “But bitcoin is 20 times more volatile than trading the euro to the dollar.”
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At its height, bitcoin had soared almost 30-fold since the start of the year, helped in part by its debut on mainstream markets as two major US exchanges began trading bitcoin futures.
Published in The Express Tribune, December 24th, 2017.
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