x

Abu Dhabi, UAESaturday 15 December 2018

Crytocurrency slump continues as Bitcoin approaches $5,000

The dive comes amid increasing regulatory scrutiny of initial coin offerings

Bitcoin declined as much as 6.1 percent to $5,119, while so-called alternative coins slumped even more AFP 
Bitcoin declined as much as 6.1 percent to $5,119, while so-called alternative coins slumped even more AFP 

Cryptocurrencies resumed their slump on Monday, with Bitcoin approaching the $5,000 mark for the first time since October 2017, in the wake of a split of one of the largest major tokens and increased regulatory scrutiny of initial coin offerings.

Bitcoin declined as much as 6.1 per cent to $5,119, while so-called alternative coins slumped even more, with Ether tumbling as much as 12 per cent and Litecoin cratering as much as 13 per cent. XRP, the token associated with Ripple, was the lone gainer among major digital currencies. The Bloomberg Galaxy Crypto Index fell as much as 78.4 per cent to a one year-low on a closing basis.

The SEC announced its first civil penalties against two cryptocurrency companies that didn’t register their initial coin offerings as securities. Airfox and Paragon Coin Inc. will each have to pay $250,000 in penalties to compensate investors, and will also have to register their digital tokens as securities, the agency said in a November 16 news release.

_________

Read more:

Is regulation a betrayal of Bitcoin's underworld origins?

PayPal beats Q3 estimates, looks to monetise Venmo

Bahraini cryptocurrency exchange eyes GCC launch in 2019

_________

The issuers were asked by the US Securities & Exchange Commission to provide refunds to investors, raising concern that other companies that used the proceeds from sales to finance projects could be forced to do the same.

Volatility has returned to cryptocurrencies, with the largest tokens shedding billions in market value since the hard fork of Bitcoin Cash debuted last week. That came as two software-development factions failed to agree on a way to upgrade the offshoot of the original Bitcoin, leading to a computing power arms race. Read about how the Bitcoin Cash clash is costing investors billions

The cryptocurrency industry has now lost more than $660 billion in value from a January peak, according to data from CoinMarketCap.com. Bitcoin is down more than 70 per cent from its December 2017 high, the data show.

Thomas J. Lee, managing partner at Fundstrat Global Advisors and a long-time crypto bull, slashed his year-end price target for Bitcoin to $15,000 from $25,000. The target is based on a fair value multiple of 2.2 times the breakeven cost of mining, which the firm pegs at $7,000, according to a report last week.

“Crypto-specific events have led to greater uncertainty in the crypto market, including the contentious hard fork for Bitcoin Cash,” Mr Lee said in the note. Bitcoin’s break below $6,000 “has lead to a renewed wave of pessimism”, he said.