[dropcap]B[/dropcap]itcoin tumbled as much as 19%, putting the digital currency on pace for its worst week since January 2015, as volatility climbs following a record-setting surge in the price.
After flirting with US$3 000 on Monday, the cryptocurrency has retreated to as low as $2 076,16 in intraday trading. Other digital coins are also falling. The decline coincides with a slide in technology stocks that began after a report from Goldman Sachs Group warned that low volatility in the biggest tech stocks may be blinding investors to risks like cyclicality and regulation.
One of Goldman Sachs’s technical analysts, Sheba Jafari, also sent out a note early this week saying bitcoin was poised for a reversal. Analysts at Morgan Stanley wrote in a report on Wednesday that bitcoin needs government acceptance and regulation in order to keep climbing.
Many of bitcoin’s cousins, like ripple, NEM and monero, have also struggled in the last week, while the price of ethereum — the second-largest cryptocurrency — has increased 20% as investors speculate whether it can nab the top spot.
The weakness in bitcoin’s price also began after digital currency exchange Coinbase experienced an outage on Monday due to high trading volume. The interruption followed a slew of recent performance issues that have frustrated users. The exchange said today on its website that it’s investigating issues with load times, and customers “may be unable to load or log in to the website during this time”.
Another exchange, Bitfinex, tweeted on Tuesday that it was under a distributed denial of service attack, raising questions about the safety of using cryptocurrencies. Last year, Bitfinex had $65m stolen by hackers.
Bitcoin followers have pointed to numerous other factors that may be contributing to this week’s underperformance, such as the US Federal Reserve’s interest rate hike yesterday.
“The decline coincided with the closure of millions of dollars in long positions on OKCoin, one of the major leveraged bitcoin exchanges, a development that likely exacerbated the decline,” cryptocurrency research company CoinDesk wrote in a 12 June article. — Reported by Lily Katz, (c) 2017 Bloomberg LP