Bitcoin plummeted on Thursday amid wild volatility in cryptocurrency markets, with traders citing a sell-off across assets as fears of the economic damage from the coronavirus pandemic take hold. The biggest cryptocurrency slumped as much as 25% during morning trading before clawing back some of its losses. It was last down 22% at $6,206, heading for its biggest daily loss in five years.
Bitcoin has lost over 30% of its value in the last five days, outpacing sharp losses for assets from stocks to oil as the pandemic wreaks havoc on the daily life of millions. "We've seen de-risking across all asset markets," said Jamie Farquhar, portfolio manager at London-based crypto firm NKB. "Bitcoin is certainly not immune to that."
Bitcoin's slump underlines nagging questions over its practicality as a currency, or as a stable store of value. Those concerns, as well as worries on regulation, have kept mainstream investors away.
Prone to wild and often inexplicable price swings, it has through its 12-year life failed to take off as a means of payment, its use instead mainly limited to speculation. Other major cryptocurrencies, which tend to move in tandem with bitcoin, also suffered sharp falls. No.2 coin ethereum fell 27%, while third-largest coin XRP, used in US start-up Ripple's payments system, tanked 21%.
Bitcoin's fall has also undermined proponents' claims that it acts as a safe haven in times of geopolitical stress. The steep drop has pushed bitcoin deep into negative territory for 2020, after a strong start to the year. In the first six weeks of 2020, bitcoin rose by nearly half as investors bet that a combination of arcane tech factors in its code and expectations of mainstream acceptance were leading to a repricing.
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