Bitcoin jumps back above US$6,000 to give respite to investors

The rise marks a pause from bitcoin's jarring decline through most of 2018.
The rise marks a pause from bitcoin's jarring decline through most of 2018.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - The weekend is offering some respite for bitcoin investors.

The bellwether of the cryptocurrency world rose 8 per cent to US$6,338.22 as of 5.30pm in New York on Saturday (June 30), according to Bitstamp prices. The gain, which comes after the digital asset crashed through the US$6,000 threshold last week for the first time since February, means the token has still lost about two-thirds of its value since reaching a record high of nearly US$20,000 in December.

Saturday's rise marks a pause from the jarring decline through most of 2018. It follows the increase of more than 1,400 per cent last year as bitcoin exploded onto the mainstream. The peer-to-peer currency developed after the 2008 global financial crisis traded at as little as 30 cents at the end of 2010.

While it is difficult to identify specific catalysts for bitcoin's decline, the bursting of a speculative bubble may be at the heart of the matter as questions about the long-term viability of the virtual currency and price manipulation abound.

Bitcoin was "very much" a bubble, Robert Shiller, the Nobel laureate economist whose warnings about dot.com mania proved prescient, said in an interview with Bloomberg Television's Tom Keene on June 26. Last year's surge was "not a rational response".

Hacks at two South Korean exchanges and a regulatory clampdown in Japan have weighed on sentiment in recent weeks. Regulators around the world have stepped up scrutiny of cryptocurrencies on concern that they are a breeding ground for illicit activity, including money laundering, market manipulation and fraud.

Lesser-known tokens have been hit the hardest. Dead Coins lists around 800 that are effectively worth nothing, while Coinopsy puts the tally at more than 1,000. Fewer than 4 per cent of coins with market caps from US$50 million to US$100 million were successful or promising, according to a March analysis from ICO advisory firm Satis Group.