Home Cryptocurrency News Bitcoin Bitcoin Steadies After 26% Slump as Traders Brave Volatility

Bitcoin Steadies After 26% Slump as Traders Brave Volatility

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Bitcoin continues to wobble, trading near $11,000 a day after losing a quarter of its value as traders sought a floor for pricing amid growing concern regulators around the world will move ahead with new rules to restrict the burgeoning cryptocurrency industry.

The largest digital currency rose 1 percent to $10,831 at 12:20 p.m. in Hong Kong after slumping as much as 26 percent Tuesday, according to Bloomberg composite pricing. Rival cryptocurrencies Ripple and Ethereum swung between gains and losses.

“Cryptocurrency holders are trying to decide whether to abandon Bitcoin,” Steven Englander, head of research and strategy with Rafiki Capital, said in a Jan. 16 note to clients. “The dilemma is that once you stop pricing Bitcoin and its derivatives as new assets that will head to the moon, the pricing model is more conventional and much less breathtaking.”

At least some retail investors are still trading amid the selloff.

“I have a zen philosophy that you just go with the flow,” said George Tasick, a part-time crytocurrency trader in Hong Kong whose day job is making fireworks. “I’m not really changing my behavior in any way.”

Speculators across the globe are struggling to determine when or how market watchdogs may rein in an industry that’s decentralized and derives much of its value from anonymous ownership. Many assertions that digital coins represent a bubble have triggered double-digit selloffs over the past year, only to be followed by rebounds.

In South Korea, shutting down cryptocurrency exchanges is still an option amid ongoing discussions, Finance Minister Kim Dong-yeon said in an interview with TBS radio Jan. 16. Kim said there’s irrational speculation and that rational regulation was needed.

“It’s going to be very tough in a liberal democracy like South Korea if you have a huge constituent in the population that’s involved” in cryptocurrencies, said Arthur Hayes, chief executive officer of cryptocurrency trading platform BitMEX. “How’s the government going to curtail it and still get votes in the next election? It’ll be very interesting to see how that all plays out.”

China, meanwhile, is set to escalate its clampdown on cryptocurrency trading, targeting online platforms and mobile apps that offer exchange-like services, according to people familiar with the matter.

In the U.S., state regulators are becoming more active with BitConnect shuttering its cryptocurrency exchange and lending operation after receiving two cease-and-desist letters from the Texas State Securities Board and North Carolina Secretary of State Securities Division for the unauthorized sale of securities and suffering from denial-of-service attacks.

Hayes said he is telling clients the “extreme” price swings seen in cryptocurrencies are normal and Bitcoin is “not a market that goes up and down in a very measured fashion.”

— With assistance by Benjamin Robertson, and Justina Lee

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