23 Dec 2017

Bitcoin slump sees trades suspended

10:29 am on 23 December 2017

Bitcoin plunged on Friday, extending a fall that saw the crypto-currency lose more than a third of its value from a record of nearly $USD20,000 ($NZ28,526).

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Photo: Pixabay

The crypto-currency's price dipped below $11,000 on Friday, according to the Coindesk exchange website, before recovering to about $12,000.

Amid the swing, three Bitcoin-related exchanges suspended certain trades.

Bitcoin has had a blistering trip over the past 12 months. Its price at the start of the year was $1,000.

It is now on track for its worst week since 2013.

Charles Hayter, founder and chief executive of industry website Cryptocompare, said: "A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes."

He said a lot of traders would have been cashing in on the spectacular gains made over the year.

What's going on?

The past few weeks have seen Bitcoin enter the mainstream after the CME and CBOE exchanges in the US started trading futures contracts underpinned by Bitcoin.

This allows investors to bet on where they expect the price of Bitcoin to be at certain points in the future.

The exchanges have automatic brakes that apply once a commodity or asset has moved by a certain amount.

That happened on both the CME and CBOE exchanges, precipitating brief halts in trading.

What do people say about Bitcoin?

Regulators around the world have stepped up their warnings about its provenance as an investment.

Its origins are only barely understood, its volatility is extreme and its use as a currency is limited.

One of this week's most striking comments comes from Denmark's central bank governor, who called it a "deadly" gamble.

Earlier this month, the head of one of the UK's leading financial regulators warned people to be ready to "lose all their money" if they invested in Bitcoin.

Andrew Bailey, head of the Financial Conduct Authority, told the BBC that neither central banks nor the government stood behind the "currency" and therefore it was not a secure investment.

- BBC

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