Bitcoin pauses below record peak; gained 55 percent in November

December 02
07:16 2017

By Swati Pandey

SYDNEY (Reuters) – Bitcoin hovered around $ 9,600 in volatile trade on Friday, after tumbling about 15 percent from an all-time high hit this week as some money managers warned ominously of a bubble and further falls in the stratospheric cryptocurrency.

Bitcoin was last down around 3.4 percent at $ 9,612.60 on the Luxembourg-based Bitstamp exchange, from a record peak of $ 11,395 set on Wednesday. On Thursday, it went as low as $ 9,000..

The latest slide has tempered an astronomical rise in recent months: Bitcoin had jumped almost 1,100 percent year-to-date on Wednesday. As of 0200 GMT, it was still up around 915 percent.

One wealth manager said technical chart analysis was predicting deeper falls.

“A correction could bring bitcoin back to its previous level of chart support of around $ 7,500. That’s over a 20 percent drop from its current price,” said Shane Chanel, equities and derivatives adviser at ASR Wealth.

“Without everyday utility, pure speculation is driving prices at the moment. Traders are forced to use technical indicators to make buy and sell decisions.”

Despite its massive fall this week, bitcoin still ended November 54.6 percent higher, its best monthly performance since a near 66 percent gain in August.

The cryptocurrency has posted monthly losses only three times in 2017.

Bitcoin’s rise has been fuelled by signs that the digital currency is slowly gaining traction in the mainstream investment world, as well as by increasing public awareness.

Several large market exchanges including Nasdaq, CBOE Holdings and CME Group — the world’s largest derivatives exchange — have said they are planning to provide futures contracts based on bitcoin.

Bitcoin’s rapid ascent has prompted warnings from a stream of prominent investors that it had reached bubble territory.

The deputy governor of the Bank of England on Wednesday said investors should “do their homework” before investing in the digital currency.

Bitcoin investments are seen as mere speculation because demand has skyrocketed without fundamentals backing the cryptocurrency, said Jin Yong-jae, a Seoul-based economist at HI Investment & Securities.

That has made the price of bitcoin “very much volatile,” Jin added.

“There are people who invest in bitcoin for its future value, but most seem to be just jumping on the bandwagon, without being fully aware of the structure or how it will replace actual currencies in the future.”

Others are unfazed by talks of a bubble, though, predicting still further gains.

“The number of bitcoins that can be mined is limited to 21 million, of which 16.5 million bitcoins are already in circulation,” said Siddharth Agarwal, lead financial analyst at research firm GlobalData.

“As bitcoin mining becomes increasingly difficult, this could further drive bitcoin prices upwards.”

(Reporting by Swati Pandey; Additional reporting by Dahee Kim in SEOUL and Abhinav Ramnarayan in LONDON; Editing by Kim Coghill)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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