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Bitcoin has plummeted more than 20 per cent this week after Chinese authorities said they planned to shut down the exchanges on which the cryptocurrency is traded. JPMorgan boss Jamie Dimon also attacked bitcoin earlier this week , labelling it a “fraud” which “will blow up”.
BTCChina, one of the largest Chinese bitcoin exchanges, said on Thursday it would cease trading by the end of September, Reuters reported.
That prompted a sharp sell off that left bitcoin trading 30 per cent below the record highs reached earlier this month. One bitcoin cost $3,138.63 on Friday morning, with $3,000 seen as a key psychological level for the virtual currency.
Bitcoin, which is not backed by any government, more than quadrupled in value from December to September and some analysts predict it can recover from recent falls.
“Past experience tells us that bitcoin will likely brush these latest challenges aside, yet with Chinese regulators clamping down and big name financial leaders talking bitcoin down, this has been a tough fortnight for cryptocurrencies,” Josh Mahoney, a market analyst at IG.
The unprecedented gains have seen regulators and financial experts seek to warn people about what remains a highly volatile and risky investment. The Chinese central bank is also reportedly working on its own digital currency.
Earlier this week, Mr Dimon told an investment banking conference in New York that bitcoin “isn’t going to work”.
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“You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart,” he said.
Mr Dimon called bitcoin a “fraud” that was “worse than tulip bulbs”, referring to the Dutch “tulip mania” of the seventeenth century which is generally seen as the world’s first speculative bubble.
The JPMorgan chairman, president and chief executive said he would fire “in a second” employees stupid enough to trade in bitcoin.
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