Bitcoin almost wipes out its mega gain as swiftly as it came

Bitcoin dropped as much as 18 per cent on June 27 and was trading around US$10,890 as of 2.27pm in New York.
Bitcoin dropped as much as 18 per cent on June 27 and was trading around US$10,890 as of 2.27pm in New York.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - Bitcoin's rise was meteoric this week - and its decline has been just as swift.

It's easy come, easy go in the crypto world, where a frenzy over bitcoin pushed its price to nearly US$14,000 (S$18,900) on Wednesday (June 26), its highest level since January 2018. The largest digital asset then reversed course in a matter of minutes after a prominent cryptocurrency exchange reported an outage.

The retreat accelerated on Thursday and put the coin's price back to nearly the same level as just five days ago.

Bitcoin dropped as much as 18 per cent on Thursday and was trading at around US$10,890 as of 2.27pm in New York.

Volatility is near the highest levels since early 2018, when the crypto bubble was bursting.

"It seems the crypto market got a bit too hot yesterday and is now cooling down," wrote Mati Greenspan, senior market analyst at trading platform eToro, in a note.

"What an incredible market where the price can crash about 15 per cent in less than an hour and bring us back to the highs of the previous trading day."

Alternative coins, including Ether and Litecoin, also fell, each losing more than 10 per cent. The Bloomberg Galaxy Crypto Index, which tracks some of the largest digital assets, dropped as much as 21 per cent on Thursday.

Bitcon's jump in prices this week had brought back memories of the crypto bubble that burst at the end of 2017, when Bitcoin and other cryptocurrencies - beset by regulatory setbacks and fraud-related issues - fell from grace.

Bitcoin's price, for instance, languished around US$3,600 just six months ago, down from almost US$20,500 in December 2017.

Crypto bulls were heartened this year after numerous Wall Street mainstays showed increased interest and wider acceptance of cryptocurrencies and their underlying blockchain technology, helping to push prices higher. Things turned parabolic earlier this month when Facebook unveiled plans for its own digital currency Libra - many proponents cited the move as long-sought validation of the potential digital assets have to drastically alter the global financial system.

But Thursday's reversal prompted one of Bitcoin's biggest proponents, Mike Novogratz, to lament on not having taken more money off the table before the coin lost nearly all its gains. That may have contributed to its swift demise, according to John Spallanzani, portfolio manager at Miller Value Partners.

It's a very "tight-knit market", said Mr Spallanzani. "Most likely Novo hitting bids spread like wildfire."