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Bitcoin falls off a cliff again as cryptocurrency slump deepens

Cables are seen in crypto currency mining computers are seen in Istvan Tajti's office in Budapest, Hungary on Wednesday, 31. January 2018. Photo: Akos Stiller

By BLOOMBERG

HONG KONG • Cryptocurrencies dropped sharply for the second time in less than 24 hours, sinking toward a nine-month low amid concern that broader adoption of digital assets will take longer than some anticipated.

Bitcoin, the largest cryptocurrency, tumbled as much as 9.8% and was trading at US$6,390 (RM26,425), down 8.1%, as of 8:24am yesterday in New York, according to Bloomberg composite pricing.

The Bloomberg Galaxy Crypto Index, a gauge of the largest digital assets, traded near its lowest level since November 2017 as rival coins ripple, ether and litecoin also slipped more than 4% each.

Cryptocurrency bulls, who bet an expanding user base would drive up prices, have faced a string of recent disappointments. Business Insider reported on Wednesday that Goldman Sachs Group Inc was pulling back on near-term plans to set up a crypto trading desk. This comes after last month’s decision by US regulators to reject another round of bitcoin exchange-traded fund proposals.

“Their name carries weight across the globe,” said Ryan Rabaglia, head trader at digital asset brokerage OSL in Hong Kong, referring to Goldman Sachs. “When people see their name, their eyes may light up, and they say: OK, we’ve finally made it — the bigger players are going to start to enter.”

At the same time, enthusiasts drawn to bitcoin’s original promise of anonymity and freedom from government control were also dealt a blow on Tuesday when veteran Erik Voorhees’s trading platform Shape- Shift AG said it will begin asking users for personal information.

ShapeShift’s move is a sign of the growing formalisation of a market initially known for its libertarian bent. Imposing mandatory Know Your Customer procedures is “not something we want to do” and a “heavy decision done to derisk under duress”, CEO Voorhees said on Twitter.

The market value of virtual currencies tracked by CoinMarketCap. com has slumped 75% from its January peak to US$202 billion.

The next key level to watch for bitcoin is US$5,000, according to Stephen Innes, head of trading for Asia Pacific at Oanda Corp, who said a drop below that threshold may cause losses to accelerate.