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Abu Dhabi, UAESunday 16 December 2018

Bitcoin bubble warnings grow louder as cryptocurrency fluctuates

Digital currency fell as much as 30 percent overnight in Asia, and the action became so frenzied that trading has been suspended

Bitcoin has been on a roller coaster voyage over the last few weeks. REUTERS/Brendan McDermid
Bitcoin has been on a roller coaster voyage over the last few weeks. REUTERS/Brendan McDermid

What's a bitcoin worth? Lately nobody knows for sure, but after a wild ride on Friday, it's worth a good deal less than it was Thursday. After losses over the last few days, the digital currency fell as much as 30 percent overnight in Asia, and the action became so frenzied that the website Coinbase suspended trading.

It later made up much of that ground, and slumped 9.5 percent to $14,042 Friday, according to the tracking site CoinDesk. Experts are warning that bitcoin is a bubble about to burst, but things might get crazier before it does: A lot of people have heard of bitcoin by now, but very few people own it.

Michael Novogratz, the former macro manager who’s turned into one of the biggest champions of bitcoin, shelved plans to start a cryptocurrency hedge fund and predicted that the digital money may extend its plunge to $8,000.

“We didn’t like market conditions and we wanted to re-evaluate what we’re doing,” Mr Novogratzsaid. “I look pretty smart pressing the pause button right now.”

He told potential investors last week that he changed his mind, two days before his Galaxy Digital Assets Fund was due to start on December 15. Mr Novogratz cited a growing number of hurdles, including the prospect of buying bitcoin or ether for clients, while simultaneously selling crypto investments in his personal account.

“I didn’t want to have to deal with the schizophrenic emotional side of it,” Novogratz said. “There are just so many conflicts in that business. It was going to be more complicated than I wanted.”

Bitcoin has slumped as much as 42 percent in the past four days, the biggest decline over such a span since 2013. On Friday it dropped to as low as $10,776, before rebounding to $13,268. It last traded below $10,000 on December 1, when the US commodity futures trading commission agreed to allow trading in bitcoin futures. Other cryptocurrencies including ethereum and litecoin also tumbled.