Bitcoin tumbled to its lowest level since February as the meltdown in the world’s largest digital currency accelerated, renewing concern about the long-term viability of the much hyped alternative to traditional currencies.
The price of the digital coin fell as much as 4.6% Tuesday to $6 450.01, bringing the slide for the year to more than 50%. It’s down from a record high of $19 511 reached in December, the culmination of the more than 1 400% surge seen in 2017 as Bitcoin burst on to the mainstream.
“I don’t think this is driven on any particular news, just the general downtrend after the 2017 run,” Kyle Samani, managing partner at Austin, Texas-based crypto hedge fund Multicoin Capital, said in an email. “A lot of people who bought at $9 000 in April are realising that they’re not going to break even anytime soon, and are instead trying to get out.”
Cryptocurrencies have been beset by a string of bad news. Most recently was the “cyber intrusion” on the South Korean cryptocurrency exchange Coinrail this past weekend that appeared to result in a loss of an unknown quantity of digital currency. Bitcoin slumped 12% on Monday.
Exchanges have come under growing scrutiny around the world in recent months amid a range of issues including thefts, market manipulation and money laundering. Back in May, the sector found itself under increasing government scrutiny when the Justice Department opened up a criminal probe into illegal trading practices that can manipulate the price of Bitcoin and other cryptocurrencies.
“The relative size of this user group raises questions,” Susan Eustis, president of WinterGreen Research Inc., said in an email. “As cryptocurrency venues have come under growing scrutiny around the world in recent months amid a range of issues including thefts, market manipulation and money laundering, the base of the Bitcoin appeal has eroded.”
Skeptics have remained vocal. Bitcoin got no love from two of the world’s wealthiest men, Bill Gates and Warren Buffett, with the latter calling the currency “probably rat poison squared” last month.
In China, the Communist Party-run People’s Daily reported on June 7 that the country will continue to crack down on illegal fundraising and risks linked to Internet finance, quoting central bank officials. The nation’s cleanup of initial coin offerings and Bitcoin exchanges has almost been completed, the newspaper said, citing Sun Hui, an official at the Shanghai branch of the central bank.
© 2018 Bloomberg L.P