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Bitcoin plunges below $12,000

The biggest and best-known cryptocurrency had seen a staggering twentyfold increase since the start of the year

Jemima Kelly & Shinichi Saoshiro | Reuters  |  London/Tokyo 

bitcoin, cryptocurrency

plunged by a quarter to below $12,000 on Friday as investors dumped the in manic trading after its blistering ascent to a peak close to $20,000 prompted warnings by experts of a bubble. It capped a brutal week that had been touted as a new era of mainstream trading for the volatile digital currency when futures debuted on CME Group, the world’s largest derivatives market on Sunday. Friday’s steep fall bled into the US stock market, where shares of companies that have recently lashed their fortunes to or blockchain — its underlying technology — took a hard knock in early trading. The biggest and best-known had seen a staggering twentyfold increase since the start of the year, climbing from less than $1,000 to as high as $19,666 on the Luxembourg-based on Sunday and to over $20,000 on other exchanges. has fallen each day since, with losses accelerating on Friday. In the futures market, one-month futures on Cboe Global were halted due to the steep price drop, while those trading on the CME hit the limit down threshold. In the spot market, fell to as low as $11,159, down more than 25 per cent on the Luxembourg-based Bitstamp exchange, its largest one-day drop in nearly three years.

For the week, it was down around a third — its worst performance since April 2013. "After its parabolic-like rally, a crash was imminent and so it has proved," said Fawad Razaqzada, market analyst at in London. "Investors may have also been put off buying at those elevated levels amid repeated warnings from experts about the way it had climbed near $20,000." "A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes," said Charles Hayter, founder and chief executive of industry website Cryptocompare in London. "A lot of traders have been waiting for this large correction." "With the end of the year in sight a lot of investors will be taking profits and saying thank you very much and closing their books for the holiday period," he added. Warnings about the risks of investing in the unregulated market have increased — Denmark's central governor called it a "deadly" gamble — and there have been worries about the security of exchanges on which are bought and sold. South Korean exchange Youbit said on Tuesday it is shutting down and is filing for bankruptcy after it was hacked for the second time this year. Coinbase, a US company that runs one of the biggest exchanges and provides digital "wallets" for storing bitcoins, said on Wednesday it would investigate accusations of insider trading, following a sharp increase in the price of a spin-off hours before it announced support for it.

First Published: Sat, December 23 2017. 02:24 IST