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Bitcoin plunges below $13,000, heads for worst week since 2013

Bitcoin loses a third of value in just five days as bitcoin moves known to be big and volatile

Reuters  |  London/Tokyo 

Bitcoin

plunged below $13,000 on Friday after losing around a third of its value in just five days, with the on track for its worst week since 2013 after a blistering ascent to a peak close to $20,000 on Sunday. 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 exchange on Sunday and to over $20,000 on other exchanges. But has fallen each day since then, with losses accelerating on Friday. It fell to as low as $12,560 on Bitstamp, marking a fall of almost 20 percent on the day. At 0850 GMT it was trading down 15 percent on the day at $13,320 and was heading for its worst day in more than three months. For the week, it was down around a third - its worst performance since April 2013. "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 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. has had a difficult week.

As warnings about the risks of investing in the volatile and unregulated market have continued to sound louder - with Denmark's central bank governor calling it a "deadly" gamble - there have been more worries over the exchanges on which cryptocurrencies 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 U. S. 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. Crypto Rivals As rival cryptocurrencies slid along with bitcoin, the total estimated value of the crypto market fell to as low as $480 billion, according to industry website Coinmarketcap, having neared $650 billion just a day earlier. But other cryptocurrencies had surged earlier in the week, with many market-watchers saying investors who felt bitcoin's price had become stretched were moving into other digital coins, rather than cashing out entirely. Ethereum, the second-biggest by market size, soared to almost $900 earlier in the week, up from around $500 just a week earlier. Ripple, the third-biggest, has more than quadrupled in price since Monday. "A lot of the capital is flowing from into alternative coins," said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers in Sydney. Stephen Innes, head of trading in Asia-Pacific for retail FX broker Oanda in Singapore, said that there have also been moves out of into Cash, a clone of the original Oanda does not handle trading in "Most of it is unsophisticated retail traders getting burned badly," Innes said on bitcoin's recent retreat. While some say the launch by and its rival of futures over the last two weeks has given the some perceived legitimacy, many policymakers remain sceptical. is known to go through wild swings. In November, it tumbled almost 30 percent in four days from $7,888 to $5,555. In September, it fell 40 percent from $4,979 to $2,972. "Trading in is akin to gambling, so its movements don't follow logical patterns," said Takashi Hiroki, chief strategist at Monex Securities in Tokyo. "Unlike equities and bonds, it is not possible to calculate expected returns on bitcoin, so buying it becomes a gamble rather than an investment."

First Published: Fri, December 22 2017. 16:16 IST
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