Bitcoin continues downward slide

Bitcoin has continued a downward slide as cryptocurrency plunged by as much as 12 percent on Friday on track for its heaviest two-day drop in two years.

Bitcoin had been on a tear until Wednesday, gaining more than 40 percent in two weeks to hit around $1,139 on the Europe-based Bitstamp exchange, just shy of its all-time record of $1,163.

But the Web-based digital currency plunged on Thursday, falling as much as 20 percent at one point. It continued that fall on Friday, with its losses accelerating.

It fell as low as $871, down almost a quarter from its peak on Wednesday, before recovering to about $900 by 1455 GMT. That still left it down 10 percent on the day and on track for its worst two-day performance since January 2015.

Meanwhile, China’s central bank has noted in a statement that Bitcoin prices had shown abnormal fluctuations in recent days, and said those investing in it should do so carefully, with awareness of the currency’s volatility.

The trading between Chinese Yuan and Bitcoin had made up about 98 percent of the market for the past six months, according to market analyst because there are no trading fees on Chinese exchanges, making it is much easier to get in and out of trades and therefore creates a higher trading volume.

The central bank’s words carried echoes of its 2013 warning that financial institutions should steer clear of the digital currency, which sparked a $300 slide in Bitcoin. It also repeated on Friday its 2013 view that Bitcoin is not a currency and could therefore not be circulated as a real currency in the market.

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“This is the Chinese authorities saying: we’re watching,” said Charles Hayter, CEO of digital currency data analysis Website Cryptocompare, adding that “The relative size of the Bitcoin market is minor, but trading has reached up to $10 billion a day on the Bitcoin-yuan pairs”.

“The full meaning of the government’s comments is not 100 percent clear, but restrictions and regulation of trading is one avenue that could affect volumes and therefore price,” the CEO added.

 


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