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Bitcoin breaches US$7,000 in downbeat end to dismal quarter

Regulatory pressure is mounting in the cryptocurrency space; social media platforms are distancing themselves from industry

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The Bitcoin price dive took the token's losses in 2018 to a whopping 50 per cent, and other digital assets, including rivals Ripple and Litecoin, slumped more.

BITCOIN'S miserable quarter isn't over yet. The world's biggest cryptocurrency by market value dropped below the US$7,000 mark on Friday morning in Asia, the first time it's breached that level since early February, according to data compiled by Bloomberg. It fell as low as US$6,912 before rebounding, trading at US$7,094 as at 7.50 am in Hong Kong. The moves took the token's losses in 2018 to a whopping 50 per cent, and other digital assets, including rivals Ripple and Litecoin, slumped more.

In addition, regulatory pressure is mounting in the cryptocurrency space, while major social media platforms are distancing themselves from the industry. Reddit Inc, a community hub popular in the crypto community, no longer accepts payments made in Bitcoin, while Twitter Inc confirmed on Monday that it's banning advertisements for initial coin offerings, joining Facebook and Google.

Looming over the market are sales of Bitcoin held by the trustee of Mt Gox, the now-defunct Japanese exchange. The trustee sold about US$400 million in Bitcoin and Bitcoin Cash in the last few months to reimburse the exchange's creditors, according to his recent report. The trustee had said that he will sell more of the cryptocurrency he holds. As at early March, he was sitting on more than US$1 billion.

"Bitcoin is under selling pressure again and chances of its recovery are looking slim," Naeem Aslam, the chief market analyst at TF Global Markets, said in a note. It has "slid significantly, since the tech giants' ban on ICOs", he noted.

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The slump this year is its biggest quarterly decline since 2011. Keep in mind that Bitcoin rallied 1,400 per cent last year.

Yet despite the fact that digital currencies have been around for almost a decade, apparently, that's not enough time to form an opinion.

Almost half of the more than 400 institutional allocators, such as pensions, sovereign wealth funds and family offices, surveyed at a Context Summits conference in Miami said they don't know what to make of cryptocurrencies.

Twenty-seven per cent of the respondents consider them to be a legitimate asset class, while 26 per cent think they're a fraud. The survey was conducted from Jan 31 to Feb 2.

While crypto funds seem to be popping up everywhere - 167 launched in 2017, more than eight times the year prior, according to Autonomous Research - they may struggle to gain widespread acceptance from those responsible for overseeing other people's wealth.

Eleven per cent of those surveyed at the industry conference said they plan to allocate to crypto funds this year. Seventy-one per cent said they won't, and 18 per cent were undecided.

Alternative-investment allocators may be taking a wait-and-see approach, as US regulators are still considering how to handle the phenomenon. The Securities and Exchange Commission is scrutinising everything from initial coin offerings to trading venues, but exactly how it might crack down on the industry remains to be seen.

The SEC has been examining the business practices of crypto hedge funds, Bloomberg News reported this month, asking how they price their digital investments and seeking information on compliance with rules meant to prevent the theft of clients' cash. BLOOMBERG

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