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Bitcoin's bad week gets worse as selloff deepens to 20%
[SINGAPORE] Bitcoin's rough week looks set to end on a sour note.
The virtual currency fell 4.9 per cent to US$8,875.60 at 8.36 am in New York Friday, after earlier losing as much as 10 per cent.
Bitcoin has slumped more than 20 per cent this week amid increased regulatory scrutiny in the US and Japan, an attempted theft at one of the biggest trading venues, and news that the bankruptcy trustee for Mt Gox has started selling the now-defunct exchange's holdings to repay creditors.
"The screen is flashing red today and people are getting fearful," said Caleb Yap, co-founder of Singapore Bitcoin Club. "Weak hands are definitely wanting to sell. If Mt Gox can dump US$400 million of Bitcoin just like that and there's still billions left, the fear is when is the big drop coming." Mt Gox's bankruptcy trustee, Nobuaki Kobayashi, disclosed on Wednesday in Tokyo that he sold about US$400 million of Bitcoin and Bitcoin Cash since late September, part of the hoard left behind when the exchange collapsed four years ago. Kobayashi is studying further sales of the US$1.8 billion remaining.
The sale might be "the largest ever liquidation of crypto to fiat," according to Thomas Lee, head of research at Fundstrat Global Advisors. In a report Friday, he said that the firm's "bitcoin misery index" - a gauge of how investors feel about prices - is currently at 19, the lowest level since 2011. Still, the Bitcoin bull reiterated his view that the top digital coin will reach US$25,000 by the end of this year.
Signs of growing regulatory scrutiny have added to investor jitters. On Thursday, Japan's Financial Services Agency ordered two exchanges to halt operations for a month and penalized four others. That announcement came just hours after a warning from the US Securities and Exchange Commission that many online trading platforms should register with the agency.
Around the same time, Binance, one of the world's biggest crypto exchanges, said it had been the target of a "large-scale phishing and stealing attempt." While it said "all funds are safe," Binance noted that it was unable to reverse some trades from accounts targeted by the hackers.
"These are all growing pains," said SJ Oh, a Hong Kong-based trader at Octagon Strategy Ltd. "And while hurtful today, the fact that regulators are cracking down will be good for the long run."