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

Cryptocurrency NewsDec 22, 2017 04:55AM ET
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© Reuters. FILE PHOTO: A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration

By Jemima Kelly and Shinichi Saoshiro

LONDON/TOKYO (Reuters) - Bitcoin plunged below $13,000 on Friday after losing around a third of its value in just five days, with the digital currency 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 cryptocurrency 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 Bitstamp exchange (BTC=BTSP) on Sunday and to over $20,000 on other exchanges.

But bitcoin 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 Cryptocompare 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.

Bitcoin 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 cryptocurrency 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 bitcoin 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 cryptocurrency 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 bitcoin 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 bitcoin into Bitcoin Cash, a clone of the original cryptocurrency. Oanda does not handle trading in bitcoin.

"Most of it is unsophisticated retail traders getting burned badly," Innes said on bitcoin's recent retreat.

While some say the launch by CME and its rival Cboe Global Markets of bitcoin futures over the last two weeks has given the digital currency some perceived legitimacy, many policymakers remain sceptical.

Bitcoin 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 bitcoin 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."

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

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Brian CC
Brian CC Dec 22, 2017 9:53AM GMT
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Bitcoin won't hit 2K by end of 2017 it will stay above 10K and probably even 13K and I believe it will continue it's bull run in January back to its ATH of 19+K. Bitcoin is lucky it got in when it did as new alts coming on stream need to have good solid useable blockchain features for the end investor to use or else they'll be worthless, lets face it bitcoin doesn't have many features or uses apart from being somewhat anonymous (once it's gets larger adoption as a coin that will change). DeepOnion is a new alt which is the opposite and has many useable features for an investor like DeepSend, DeepVault etc. I actually really like it and am very bullish for it, developers are very active in the community and have roadmap which to date they've hit every date promised!
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Paulo Garcia
Paulo Garcia Dec 22, 2017 12:48PM GMT
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I think so.
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Brian CC
Brian CC Dec 22, 2017 9:49AM GMT
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Bitcoin won't hit 2K by end of 2017, it will stay above 10K and I believe it will continue its bull run early in January back to its ATH of 19+K. Bitcoin was lucky it got in when it did as new alts will never be worth anything if they don't have good solid useable blockchain features (which lets face it bitcoin doesn't have apart from being some what anonymous). DeepOnion is an alt which I think actually has good useable features the end investor can use (DeepVault, DeepSend etc.) developers are very active on the project with a roadmap which up to date has been hit on every promise!
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Onyeka Molokwu
Onyeka Molokwu Dec 22, 2017 7:34AM GMT
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Bitcoin heading to $10,000.00 per coin
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Michael Owen
Michael Owen Dec 22, 2017 7:58AM GMT
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Which of course would still be a very nice return on the year.
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Mazen Badawiyeh
Mazen Badawiyeh Dec 22, 2017 8:00AM GMT
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It will head to 2k at the end of this year!
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Shawn Cleveland
Shawn Cleveland Dec 22, 2017 8:00AM GMT
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You think it’ll go back up?
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Shawn Cleveland
Shawn Cleveland Dec 22, 2017 8:00AM GMT
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What makes you think that it will hit 2k?
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Ptr Dgr
Ptr Dgr Dec 22, 2017 11:45AM GMT
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Mazen BadawiyehI don't think it will go to 2k. Maybe slightly below 5k, but somewhere between 5k-8k as the bottom is much more probable.
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