Bitcoin slid to $10,000 on Wednesday for the first time since Dec. 1, leaving the cryptocurrency down by close to half from its peak hit last month.
Bitcoin’s selloff, sparked by fears of a regulatory crackdown, deepened Wednesday with the price of a single coin briefly dropping below $10,000 for the first time since November and its total loss spiraling to 50% since its mid-December peak.
The mini-crash in Bitcoin is the latest bout of volatility for the upstart cryptocurrency that made big news last year when its price skyrocketed nearly 1,400%, creating a speculative frenzy for people around the world trying to get rich quick.
A day after falling 25%, bitcoin was down more than 13% to roughly $9,200 at its low point Wednesday. At its intraday low it was 53% below its mid-December peak of around $19,500. At 3:30 p.m. ET, bitcoin, which trades 24 hours a day, was up about 0.7% at $10,690. The losses came on a day when the Dow Jones industrial average rose more than 300 points to its first-ever close above 26,000.
Market watchers warned of a bubble last year when bitcoin skyrocketed, despite the fact that it is a fledgling digital currency that still hasn’t achieved widespread acceptance from governments or central banks around the globe. Billionaire investor Warren Buffett recently told CNBC that the current bitcoin frenzy “will end bad.”
The latest bitcoin price slide has been driven by fears that governments around the globe would move to limit bitcoin trading or squash it altogether. On Tuesday, news that South Korea is weighing a ban on trading on crypto exchanges, and reports that Chinese authorities were considering a ban on its local investors using foreign bitcoin exchanges, acted as a chilling effect.
There is debate on whether bitcoin, which is a stateless and unregulated digital currency, will ever replace traditional paper currencies like the dollar. Market watchers also question whether it will ever become anything more than a speculative asset class.
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Bubble warnings have proven savvy in recent weeks as bitcoin’s value has plunged as speculators “abandon ship,” says Craig Erlam, senior market analyst at Oanda, a currency trading firm with offices in New York.
The question now, he says, is whether bitcoin and other cryptocurrencies, which have also fallen sharply in value early in 2018, will find their footing.
The recent declines could prove discouraging to people who saw bitcoin as an easy way to make a lot of money, making any recovery a more gradual process than prior bitcoin rebounds after steep drops.
“For now,” says Erlam, “it’s just a question of how low it will go, with $10,000 currently providing some reprieve.”
The South Korean government says it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil.
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