After recently reaching its all-time high of just over $20,000, the past couple of days saw Bitcoin and the whole cryptocurrency market going through a huge sell-off, with Bitcoin going down 30%. Strategists say that a few factors have been contributing to this bearish movement, including comments by central bankers and Charlie Lee deciding to sell off all his Litecoin tokens.
Marc Ostwald, global strategist at London-based ADM Investor Services International, said in a phone interview with Bloomberg:
“With holidays approaching, some people want to step away from the table, and take their chips with them. Still, I wouldn’t want to put it down too much to rationality, because this is not a rational market.”
According to Coinmarketcap, Bitcoin rose back 17.08% to $15,099.20 at 14:07 London time, compared to 24 hours earlier. Ethereum is also up 20.5% and notably, Bitcoin Cash climbed back up to $3,369.69 (+51.9%).
After predicting earlier this month that Bitcoin would reach between $40,000 and $50,000 by the end of 2018, Mike Novogratz said this week that he is halting the plans to start a cryptocurrency hedge fund.
Other factors that contributed to Bitcoin’s volatility include the outage faced by exchange platforms such as Coinbase. On Friday, all buying and selling orders were temporarily unavailable but the platform is currently fully operational.
The South-Korean exchange platform, Youbit, announced on Tuesday that it is closing and will enter bankruptcy proceedings after a cyberattack claimed 17% of all its assets.
On the other side of the world, Felix Hufeld, president of German banking supervisor BaFin, advised consumers in an interview with Bild that trading on the cryptocurrency market will produce “bitter losers” and could result in a “total loss”.
Bloomberg also reports that three days ago, the European Union’s financial-services chief, Commissioner Valdis Dombrovskis, asked the heads of the EU’s three financial supervisors to warn European citizens with regards to trading on the cryptocurrency market “as a matter of urgency”.
ADM’s Ostwald also said:
“Huge rises and sudden, spectacular setbacks wouldn’t surprise me going forward. The worry is going to be, at some point, the pips are going to start squeaking. Retail investors losing money will ask, ‘Why aren’t you intervening to help me? And the answer is going to be, ‘Well, this is a casino. On your head, be it.’ ”