Bitcoin slides as Facebook ad ban, India clampdown unnerve investors
Cryptocurrency dropped to $9,022, its lowest level since last November
Bitcoin, the world’s largest cryptocurrency, skidded 11 per cent on Thursday to its lowest since November, as a Facebook ban on cryptocurrency adverts and a growing regulatory backlash against the nascent market frightened investors.
Thursday's drop to as low as US$9,022 on the Luxembourg-based Bitstamp exchange left bitcoin trading at less than half the peak price of almost $20,000 it reached in December. It slid more than 26 percent last month, in its worst monthly performance since January 2015.
Other cryptocurrencies, including Ripple, the third-largest by market value, and Bitcoin Cash, have also racked up double-digit declines in the last 24 hours, according to Coinmarketcap.com, which tracks the industry. Ethereum was up slightly on the day.
Last year’s explosive rise in the value of digital coins and the flood of new retail investors drawn to the market have rattled global regulators nervous about a sector used largely for speculation.
Officials have said cryptocurrencies are used by criminals to launder money. India, which has likened the market to a Ponzi scheme, on Thursday vowed to eliminate their use.
The Indian finance minister said his government would take “all measures” to remove crypto-assets in “financing illegitimate activities or as part of the payment system”, Arun Jaitley told parliament.
“Sentiment towards cryptocurrencies is turning sour with negative headlines pouring out from left, right and center,” said Fawad Razaqzada, an analyst at Forex.com.
“Concerns that Facebook is banning ads and major crypto exchanges shutting down have really silenced the hype and some people are probably having second thoughts about investing their hard-earned cash into digital currencies.”
Facebook said in a post on its website this week that it was banning all advertising that “promotes financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency”.
It was not clear whether the ban would affect all cryptocurrency adverts on the social media site. Facebook could not immediately be reached for comment.
A US$530 million hack of Japanese cryptocurrency exchange Coincheck late last week has also weighed on the market, along with a subpoena US regulators sent to two of the world’s biggest cryptocurrency players, Bitfinex and Tether.
In a development welcomed by cryptocurrency investors, the finance minister of South Korea, a major hub for digital coin trading, said on Wednesday there was no plan to outlaw their buying and selling after regulators had earlier pledged to do so.
Critics call cryptocurrencies a speculative mania that will end in tears for thousands of retail investors. Supporters say the price volatility is a distraction from the value of the underlying technology.
Those backers believe cryptocurrencies and the “blockchain” technology underpinning them will transform the way money is stored and transferred, upending the conventional banking system.
“Short-term pessimism misses the point that it [regulation] could make the ecosystem thrive in the long term,” said Charles Hayter, founder of London-based Cryptocompare.
International regulators are set to debate how to address the risks posed by the market at the next G20 meeting in March.
Bank of England governor Mark Carney said this week that the G20 needed to consider how easily digital coins should be converted into other central-bank issued currencies, as well as the role of anonymity, as “a lot of the underlying use of these currencies has been illicit activity”.
Bitcoin rallied more than 1,000 percent last year as speculators piled in. The price was less than $500 as recently as early 2016.
Updated: February 2, 2018 11:25 AM