Bitcoin price plunge: Falling cryptocurrency value highlights new fears around digital money

Andrew Griffin
Friday 02 February 2018 15:58 GMT
What is Bitcoin and why is its price so high?

Bitcoin has plunged below $8,000 as its dramatic slump continues – leaving it a long way from the heights achieved weeks ago.

The value of the cryptocurrency almost reached the $20,000 mark in December, with analysts predicting its rise to continue.

Experts are now suggesting that those high prices might have been the result of market manipulation.

Bitcoin has fallen 8 per cent over the last day, and more than 21 per cent over the last month.

It appeared to be recovering during the day, however, as the result of swift buying in the market. However, this is the kind of activity that is raising concern among some regulators.

Other cryptocurrencies are seeing even more dramatic drops. Litecoin, once seen as the heir to bitcoin’s crown, has dropped by 50 per cent over the last month.

Connor Campbell, an analyst at Spreadex, described the decline as a “horror show”, and pointed to reports that the US Commodity Futures Trading Commission is investigating whether market manipulation was at play in the cryptocurrency’s rise.

“The cryptocurrency has had a horror show week already, dragged lower by regulation changes in South Korea and news that Facebook is banning adverts for the product on its site.

“Already feeling delicate, Bitcoin was then dealt another major blow this Friday, plunging 10.5 per cent to $8,000 following reports that the US Commodity Futures Trading Commission is investigating the cryptocurrency’s ludicrous end of 2017 rise for signs of market manipulation,” he said.

Along with South Korea, regulators in China, Russia and now India have expressed concern about Bitcoin.

Germany’s Bundesbank has also called for global regulation of Bitcoin, while France’s finance minister wants tougher rules for cryptocurrencies.

However, despite its dramatic collapse, Bitcoin remains significantly higher than its $900 position recorded in January 2017.

Earlier this month the US billionaire Warren Buffett ruled out a foray into cryptocurrencies, warning that the Bitcoin boom will “come to a bad ending”.

The chairman and chief executive of Berkshire Hathaway has joined the chorus of voices criticising the digital currency.

His comments came just a day after JP Morgan chief executive Jamie Dimon said he regretted calling Bitcoin a “fraud”.

Additional reporting by agencies

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