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December 22, 2017 at 07:42 AM
Bitcoin’s plunge extended to almost 30 percent Friday as the frenzy surrounding digital currencies faced one of its biggest tests yet.
The world’s largest cryptocurrency approached $10,000 as this week’s selloff entered a fourth day with increasing momentum. It touched a record high of $19,511 on Monday.
Other cryptocurrencies also tumbled: ethereum dropped as much as 36 percent and litecoin slumped as much as 43 percent, according to composite prices on Bloomberg.
Michael Novogratz, the former Goldman Sachs Group Inc. and Fortress Investment Group LLC macro trader, said he’s shelving plans to start a cryptocurrency hedge fund and predicted that bitcoin may extend its plunge to $8,000.
“We didn’t like market conditions and we wanted to re-evaluate what we’re doing,” Novogratz said in a phone interview. “I look pretty smart pressing the pause button right now.”
Bitcoin dropped to as low as $10,776, before recovering to $13,046 at 12:36 p.m. in New York.
It last traded below $10,000 on Dec. 1, when the U.S. Commodity Futures Trading Commission agreed to allow trading in bitcoin futures. For the week, the decline is as much as 39 percent. The price of the digital coin had more than doubled in the prior three weeks.
This week’s losses represent a major test for the cryptocurrency industry and the blockchain technology that underpins it, which have rapidly entered the mainstream in recent weeks.
Bears cast doubt on the value of the virtual assets, with UBS Group AG this week calling bitcoin the “biggest speculative bubble in history.”
Bulls argue the technology is a game changer for the world of investment and finance. Both will be closely watching the outcome of the current selloff.
“The sharks are beginning to circle here, and the futures markets may give them a venue to strike,” said Ross Norman, chief executive officer of London-based bullion dealer Sharps Pixley Ltd., which offers gold in exchange for bitcoin. “Bitcoin’s been heavily driven by retail investors, but there’ll be some aggressive funds looking for the right opportunity to hammer this thing lower.”
