As volatility climbs following a record-setting surge in the price, bitcoin was put on pace for its worst week since January 2015 after the digital currency sank as much as 19 percent.
In intraday trading, the cryptocurrency has retreated to as low as $2,076.16 after flirting with $3,000 on Monday. There have bene fall in other digital coins also. After a report from Goldman Sachs Group Inc. warned that low volatility in the biggest tech stocks may be blinding investors to risks like cyclicality and regulation, there has been a slide in tech stocks also and this decline in cryptocurrencies coincides with the tech slide.
Saying bitcoin was poised for a reversal, one of Goldman Sachs’s technical analysts, Sheba Jafari, sent out a note early this week. Bitcoin needs government acceptance and regulation in order to keep climbing, analysts at Morgan Stanley wrote in a report on Wednesday.
Criticism from some bitcoin enthusiasts, who say the proposed legislation is draconian, was drawn this week after a Senate bill targeting money laundering and terrorist financing was tabled.
The bill, which was introduced in May, includes a section that singles out digital currencies and prepaid access devices. While the price of ethereum — the second-largest cryptocurrency — has increased 20 percent as investors speculate whether it can nab the top spot, many of bitcoin’s cousins, like ripple, NEM and monero, have also struggled in the last week.
Also, due to high trading volume, after digital currency exchange Coinbase experienced an outage on Monday, the weakness in bitcoin’s price started. A slew of recent performance issues that have frustrated users preceded the interruption. Customers “may be unable to load or log in to the website during this time” and it’s investigating issues with load times, the exchange said today on its website.
Due to the outage, unable to purchase more of the cryptocurrency was Ben Terry, a bitcoin investor who works at an impact investment firm in Kentucky. He said that Coinbase is the most reliable option even though it may not be very reliable.
“If there was another competitor, I would jump ship in a heartbeat,” said Terry, who started buying bitcoin about a month and a half ago. “There’s just not a lot out there.”
Not much concerned about Coinbase’s performance problems was Bruce Fenton, the founder of Atlantic Financial and a board member at the Bitcoin Foundation.
“Coinbase issues are just typical growing pains,” Fenton said. “When the whole financial system is upended, it’s bound to have some bumps in the road.”
Raising questions about the safety of using cryptocurrencies, another exchange, Bitfinex, tweeted Tuesday that it was under DDoS attack. Bitfinex had $65 million stolen by hackers last year.
Other factors such as the Federal Reserve’s interest-rate hike yesterday, that may be contributing to this week’s underperformance¸ were pointed out by bitcoin followers.
“The decline coincided with the closure of millions of dollars in long positions on OKCoin, one of the major leveraged bitcoin exchanges, a development that likely exacerbated the decline,” cryptocurrency research company CoinDesk wrote in a June 12 article
(Adapted from Bloomberg)