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United States News Title: Bitcoin Is Falling Fast, Losing More Than Half Its Value in Six Weeks Late Friday in New York, bitcoin had recovered to $8,524, down 6.8% on the day after slipping below $7,700. That was the lowest level since November. At its low point, the digital currency had fallen about 60% from an intraday record of $19,783 in December, according to research site CoinDesk Inc. That marks bitcoin’s third biggest drop over the past five years. It fell 76% in the spring of 2013 and 85% from November 2013 to January 2015. Bitcoin’s sharp swings illustrate just how much the digital currency remains a highly illiquid and volatile investment, particularly relative to stock, bond or currency markets. In its nine-year history, it has had five peak-to-trough declines of more than 70% apiece, said Charlie Bilello, director of research at New York advisory firm Pension Partners. It fell 94% in less than a month in 2010—and again over a five-month stretch in 2011—but both times bounced back. The recent decline in some regards feels more severe, as the magnitude of the price drop offers a dose of reality to new investors who poured money into cryptocurrencies during last year’s rally. Many were drawn to the prospect of investing in currencies outside the control of central banks and governments, but now are having to succumb to market forces. “Headlines for crypto have been mostly negative lately,” Thomas Lee, managing partner at New York-based Fundstrat Global Advisors, wrote in a note to clients. “It has been a terrible few weeks, but the fundamental positive story for crypto remains intact,” Mr. Lee added, referring to strong millennial interest in cryptocurrencies. Robinhood, an online trading app that targets young people, this past week said more than one million people joined its wait list to trade cryptocurrencies after it announced plans to offer crypto trading services. Meanwhile, some big banks are putting up roadblocks to buying bitcoin. JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. said Friday that they no longer would allow credit-card holders to use the cards to buy bitcoin. Regulatory scrutiny is behind much of the reason for bitcoin’s sudden fall. India is the latest country to crack down on the cryptocurrency market, following in the footsteps of China and South Korea. That pressure shows that governments are turning out to be much harder to circumvent than cryptocurrency advocates once thought. Bitcoin fell 28% in January, its steepest monthly decline in three years. In the bitcoin futures market, in which traders can bet on the ups or downs in the digital currency, hedge funds have shifted their positioning so bearish bets outnumber bullish ones by more than 3 to 1, according to data released Friday by the Commodity Futures Trading Commission. A week earlier, hedge funds had been biased toward the bullish side, the CFTC data show. The current mood is a far cry from the end of last year, when cryptocurrency investment mania hit feverish levels. A popular bitcoin-services company called Coinbase briefly drew some 100,000 new customers a day around Thanksgiving, as bitcoin approached $10,000, up from under $1,000 at the start of 2017. Prices more than doubled from there, peaking at $19,783.21 on Dec. 17. Then came a six-week slide. Alex Beene, a 30-year-old from Nashville, Tenn., cashed out as the decline accelerated. He said he recently sold all his bitcoin, locking in a profit of over $60,000. Mr. Beene, who writes children’s books and works in the Tennessee Department of Labor and Workforce Development, said he bought most of his bitcoin in September, before prices surged over 500% in the following months. “You’d wake up to $5,000 to $10,000 gains on consecutive mornings,” he said. “It was like a money train that wouldn’t end, but you could tell [it] wasn’t going to last.” It didn’t. Mr. Beene did keep some litecoin—an alternative digital currency—in his portfolio. The price of litecoin is down more than 60% from a high in December, according to research site CoinMarketCap. He called the weekslong selloff “a scary scenario.” Indian Finance Minister Arun Jaitley said Thursday that the government doesn’t recognize digital money as legal tender and would “take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.” Vaibhav Parikh, partner at Indian law firm Nishith Desai Associates, said some people might have misinterpreted, wrongly concluding the government was banning bitcoin. “The Indian government said it will only crack down on the use of bitcoin for illegal activities and not on the currency itself,” he said. Other governments, particularly in Asia, have taken stringent approaches to cryptocurrency. South Korea is implementing new legislation aimed at cooling its red-hot bitcoin market. China has gone even further, ordering cryptocurrency exchanges to close and moving toward limiting bitcoin mining operations, in which new bitcoin are minted. In Japan, $530 million of a cryptocurrency called NEM was swiped in a heist on the exchange Coincheck Inc. In the U.S., regulators have warned of fraud in initial coin offerings, a new form of fundraising by which a company creates a new virtual coin or token and offers it for public sale. The offerings have attracted billions of dollars. Even Facebook Inc. is cracking down. The social-media company said this past week that it would stop running ads promoting cryptocurrencies and initial coin offerings. “I don’t think this is the end of the line for cryptos, but I’m certainly not touching any until more stability can be reached,” Mr. Beene said. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 5.
#3. To: Gatlin, TooConservative (#0)
Bitcoin, and leading alt crypto currencies definitely did see a dramatic sell off, pretty much uniformly at that, and that on top of a steady decline that's been running for the last 2-3 weeks. For the moment bitcoin seems to have stabilized in the mid 8K range, but it's the weekend. I imagine prices will now have to work to breach 10K, which used to be a comfortable place for it. Prices could drop further maybe even to the 6k -7k range but I do not expect cryptos to die. I thought the news in India was that cryptos were outlawed straightaway, and that perception may have fueled this sell off. SK has also given pause to their regulatory freezes on cryptos after a public backlash. I suppose it will indeed be a fight between cryptos vs banks & govs, but unlike ordinary money, crypto currency is basically a "living" currency by virtue of the fact that it's supported with software which is upgraded on a continuing and as needed basis, and those upgrades will address resistances put up by banks and govs. One example is an expected upgrade that would allow crypto holders to exchange their coins for other cryptos without need of a formal exchange. That would eliminate any need for formal exchanges which China and possibly SK are going after. Of course that doesn't allow purchasing of cryptos with fiat, but it's one example of how cryptos can adapt. I also wonder about the future's market that bitcoin has been saddled with. With cyrptos, a futures market is an artifical market and a means by which price manipulation can occur as there is never any actualy bitcoin that is procured, ever, in those futures contracts. All are settled in cash, and only on the future's market can shorting be conveniently done. All it takes is a bank or two to covertly place bets with each other to push the real market down. Same old price manipulation they've done and still do with gold and silver. In any event, prices on cryptos really grew too fast in Nov & Dec so this could be technically viewed as a not unreasonable, albeit scary drop for crypto holders. As the article points out, such pullbacks are not unprecedented at all. As the saying goes, bad money drives out good, and so until crypto currecies qualify as "bad money" it won't be in circulation. That won't happen until A) transactions of crypts is both fast and cheap, and B) there is a serious pull back in price, (not unlike what we've seen these past few weeks). Once that happens and scares people, they'll save their dollars and euros and instead spend their bitcoin, and that will be when it finally becomes a currency. Until then, unless price manipulation interferes, it will continue to be a wild ride.
A) transactions of crypts is both fast and cheap, and B) there is a serious pull back in price, (not unlike what we've seen these past few weeks). Once that happens and scares people, they'll save their dollars and euros and instead spend their bitcoin, and that will be when it finally becomes a currency. Until then, unless price manipulation interferes, it will continue to be a wild ride. Interesting overview. Bookmarked.
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