UK Edition
Week of woe sends digital currencies down $250bn
Panic-selling on the cryptocurrency market wiped $250bn (£177bn) off the value of digital currencies this week as regulators across the globe stepped up efforts to crack down on the disruptive alternative assets.
Bitcoin plunged as much as 35pc to $7,600 in just five days while other major digital currencies, such as Ethereum and Ripple, also haemorrhaged losses, sinking 39pc and 54pc respectively. The total cryptocurrency market saw its valuation plummet from Monday’s peak of $600bn to as low as $348bn.
The sell-off was sparked by a warning from Arun Jaitley, India’s finance minister, that the Indian government will “take all measures to eliminate” the use of digital currencies as a form of payment, and by Facebook’s new ban on cryptocurrency adverts, which it called “deceptive”.
The market was also spooked by reports that the Commodity Futures Trading Commission, the US derivatives regulator, is investigating digital currency Tether, and Bitfinex, one of the largest cryptocurrency exchanges in the world. Tether coins are claimed to be backed by US dollars held in reserve but there are concerns that the cryptocurrency has been the subject of market manipulation.
Warnings of a clampdown in Russia, China and South Korea sparked a sell-off of digital currencies last month and Bitcoin’s value has more than halved since its peak of around $19,500 in December as cryptocurrency mania swept the markets.
A “regulatory crunch” appears to be drawing near and “the wheels are coming off the Bitcoin bandwagon”, predicted Neil Wilson, the ETX Capital analyst, while 'Dr Doom', Nouriel Roubini, the New York University economics professor who predicted the 2008 global financial crisis, warned on Friday that Bitcoin was “the mother of all bubbles” backed by “charlatans and swindlers”.