BITCOIN has dipped below $US7000 for the first time since November amid a broader sell-off sparked by a perfect storm of bad news.
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BITCOIN has dipped below $US7000 for the first time since last November amid a broader sell-off which has wiped nearly half a trillion dollars off the market capitalisation of all cryptocurrencies since their January 8 peak.
The latest sell-off was sparked by a barrage of negative developments, including fresh news of a Chinese government crackdown and the limiting of cryptocurrency purchases by financial institutions and payments providers.
At the time of writing, bitcoin was trading at $US6693, down 18 per cent on the previous day, while ethereum was down 19 per cent, ripple was down 17 per cent, bitcoin cash was down 20 and cardano was down 19 per cent.
“Increasingly this is looking like a falling knife no one wants to catch,” CFD chief market strategist Greg McKenna said in a note on Tuesday. “And why would you right now? It’s not obvious what a circuit breaker to this weakness will be, or might emerge from. This could end up a full round trip back into the $US1850 region.”
In just under one month, the market capitalisation of more than 1300 cryptocurrencies has plunged by 60 per cent, down from a peak of $US831 billion to $US331 billion, according to Coinmarketcap.
Bitcoin, while still around seven times higher than one year ago, has now lost two thirds of its value since hitting an all-time high of just under $US20,000 in late December.
Over the weekend, major banks in the US and the UK including JPMorgan, Citigroup, Bank of America, Lloyds Banking Group and Virgin Money banned the use of credit cards to buy cryptocurrencies.
A spokeswoman for Lloyds, which issues more than one quarter of all credit cards in Britain, told Reuters the move was aimed at protecting customers from running up huge debts by buying cryptocurrencies on credit.
That came amid fresh reports that China, which had already banned trading through domestic cryptocurrency exchanges, was planning to stamp out remaining cryptocurrency trading in the country by blocking access to overseas-based websites and removing related applications from app stores.
According to a report on Sunday by People’s Bank of China publication Financial News, quoted by Agence France-Presse, the moves were aimed at snuffing out the “dying cinders” of cryptocurrency trading and initial coin offerings “which are glowing once more”.
Just days earlier, India’s finance minister said in a speech that the government “does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system”.
But Arun Jaitley stopped short of announcing any ban or specific regulation. “We are discouraging people from using it now,” he said in an interview with CNN. “There is a government committee that’s looking into it right now and they will announce their decisions and next steps after they are done.”
A growing number of large organisations, meanwhile, have distanced themselves from bitcoin and other cryptocurrencies, further spooking the market.
Last month, payments provider Stripe said it would no longer accept bitcoin due to high transaction fees and wait times, while Visa severed ties with cryptocurrency card provider WaveCrest due to “continued noncompliance with our operating rules”.
Last week, social media giant Facebook announced it was banning all cryptocurrency ads, including for initial coin offerings, a controversial form of crowd-funding which has drawn warnings from financial regulators.
Closer to home, news that bookmaker Neds would launch a dedicated cryptocurrency betting site was met with a swift rebuke from wagering authorities, with the Northern Territory Racing Commission warning it would formally request a cease and desist.
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