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Ripple, one of the best-performing cryptocurrencies in 2017, led a retreat among peers on Wednesday as some investors reassessed whether last year’s gains were justified.
The digital currency tumbled as much as 24 per cent to $1.61, or about half the value of its Jan. 4 peak, according to data compiled by Bloomberg. Ripple pared the loss to 12 per cent, as bitcoin and litecoin both fell by about 5 per cent.
Ripple, created to help make cross-border payments easier, surged more than 300-fold last year as the investment frenzy surrounding bitcoin spread to other cryptocurrencies. Skeptics have warned of a bubble, while governments including China and South Korea have taken steps to clamp down on what they see as excessive speculation.
Wednesday’s decline may have been fueled by profit-taking after last year’s rally, said Neelabh Dixit, co-founder of Cryptomover in Hong Kong.
The slump also coincides with an intensifying debate over the token’s premise.
Unlike many other cryptocurrencies such as bitcoin, much of ripple’s supply is controlled by the company that created it, a drawback for some market watchers who worry about too much centralization.
Others note that the token isn’t required for some of the company’s money-transfer services. Ripple’s price may also be falling amid concern over a feature that allows platforms using the token to freeze funds associated with ripple transactions, Dixit said.
“The freeze feature is not new, but because of this massive appreciation over last 20 or 25 days it got a lot of attention,” he said. “There is a faction which doesn’t count it as a cryptocurrency and then there is a faction that sees its utility in terms of making the transactions simpler and faster.”