Bitcoin bounces back after serious slump

Bitcoin halted a four-day plummet with a double-digit rebound on Saturday.
Bitcoin halted a four-day plummet with a double-digit rebound on Saturday.PHOTO: REUTERS

NEW YORK • Bitcoin rebounded on Saturday along with most of the major cryptocurrencies, halting a four-day tumble that drew worldwide attention to the unregulated US$500 billion (S$672 billion) market that's frequently called a bubble. The double-digit bounceback was strongest with second-tier digital coins.

Bitcoin cash soared 21 per cent and litecoin gained 12 per cent as cryptocurrency traders regained optimism. They were not put off by comments published on Saturday from a central banker in Germany that "the risk of rapid losses" is obscured in cryptocurrencies.

"The enthusiasm hasn't been destroyed," Mr Marc Ostwald, global strategist at London-based ADM Investor Services International, said by phone from Warsaw. "It's a volatile market, and investors are hungry for that. They say everything else is boring."

The broad recovery on Saturday coincided with a pause in bearish news that had snowballed since Monday and shaved 24 per cent off bitcoin's value, its biggest four-day selloff since 2015. Comments by central bankers, a decision by litecoin's founder to sell all his holdings and investors' wishes to cut stakes before the holiday season fuelled the dive.

"With holidays approaching, some people want to step away from the table, and take their chips with them," Mr Ostwald said about the selloff. "Still, I wouldn't want to put it down too much to rationality, because this is not a rational market."

While bitcoin was not the most volatile crypocurrency in the past week, it is the largest, and it shook the world of digital-coin trading on Friday when its interday plunge reached 30 per cent. That was the steepest dive since Jan 14, 2015, back when its market value was just US$2.4 billion. On Saturday, it was about US$260 billion.

Bitcoin advanced 10 per cent to US$15,530 at 4.21 pm New York time on Saturday, compared with 24 hours earlier, according to data on coinmarketcap.com.

In a late-week comment that undercut confidence, former Goldman Sachs Group and Fortress Investment Group macro trader Michael Novogratz said he is shelving plans to start a cryptocurrency hedge fund. He predicted that bitcoin may extend its plunge to US$8,000. Earlier this month, he predicted it could reach US$40,000 within a few months.

Growing pains in the digital-coin world and warnings emerged all week, adding to volatility. Coinbase, one of the larger trading platforms, on Friday said all buys and sells were temporarily unavailable before they were re-enabled, according to its website.

There were no incidents reported Saturday. In South Korea, Yapian, the owner of bitcoin exchange Youbit, said on Tuesday it would close and enter bankruptcy proceedings after a cyber attack that claimed 17 per cent of its total assets.

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A version of this article appeared in the print edition of The Straits Times on December 25, 2017, with the headline 'Bitcoin bounces back after serious slump'. Print Edition | Subscribe