Bitcoin, the once-promised cryptocurrency of the future, lost $12 billion in market capitalisation in less than a day after US regulators stepped away from legitimising it.
At 6PM Tuesday New York time, Bitcoin was trading at $USD 7,099 – but as morning broke, the price had plummeted to a low of $US 6,260.
Bitcoin’s radical value drop was a result of the US Securities and Exchange Commission deciding to delay a vote on whether it would approve or deny a Bitcoin ETF product from trading, which would essentially legitimise the currency in the eyes of the mainstream finance industry.
For Bitcoin enthusiasts – who describe themselves as “hodlers”, meaning they “hold” onto the currency – the overnight price plunge was simply one more in a long list of volatile value swings.
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(Zurich, Switzerland – 2 January 2015: ‘Bitcoin accepted’ sign in the window of ‘Kafi Schoffel’, a coffee bar in Zurich downtown that accepts Bitcoin as means of payment and houses a Bitcoin ATM. Image: AP)
Cryptocurrency as a whole market has lost $800 billion in value since the peak last year.
In a blog post, crypto-watcher and market analyst Jani Ziedins said Bitcoin is on track to mark all-time lows.
“It is hard to find anything positive to say about Bitcoin,” wrote Ziedins.
“Failing to hold $8k, it didn’t take long for us to crash under $7k as any hope brought about by the latest rebound vanished faster than it appeared.
“If we cannot retake $8k support over the next few days, expect us to tumble through $6k support and start making new lows.”
At its peak in December 2017, Bitcoin saw enormous amounts of capital flow in from “get rich quick” investors suffering from FOMO, or fear-of-missing-out, on the instant riches the cryptocurrency was serving only a few.
But the pre-Christmas peak was more than likely the top of the market, now leaving many rich-kid and mum-and-dad investors wondering why their share in Bitcoin is dwindling.
If you had bought $USD100 worth of Bitcoin on the 1st of November 2017 – when it was trading at $US6,750 – you would have at least doubled your money by December 27th, and then lost it all again.
(FOMO, or “Fear of missing out”, drove many to invest in Bitcoin late last year. Image: iStock)
In June this year the Reserve Bank of Australia (RBA) said Bitcoin “could” have practical applications, but there was no place for it in an established economy like Australia.
“When a country doesn’t have a credible currency, then people might look for other ones,” Dr Tony Richards, head of the RBA’s payments policy, told an Australian Business Economists event in Sydney.
“Whether those are cryptocurrencies or something like the US dollar is another issue, but we in Australia have a perfectly credible currency called the Australian dollar; we’ve had low and stable inflation for at least 25 years; and the likelihood that we’d have significant adoption of an alternative currency seems to be pretty low.”
Bitcoin was trading at $USD 6,312 as of 1200 AEST.