Bitcoin price falls sharply after ‘Facebank’ surge

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Bitcoin fell nearly $2,000 in a matter of minutes in a sharp crash, a reminder of the cryptocurrency’s volatility even as it has soared this month to its highest level since last year’s boom-and-bust cycle.

In late New York trading hours on Wednesday, bitcoin fell from $13,850 to under $11,900 in under an hour, according to Refinitiv data. That took some of the sheen off a rally that has seen bitcoin jump from just over $5,000 at the beginning of May, evoking memories of the cryptocurrency’s last boom-and-bust cycle. By Thursday morning in London bitcoin was tumbling again and trading at around $11,500.

Some attributed the slump to a brief shutdown of Coinbase, a San Francisco-based platform which is among the most popular of cryptocurrency exchanges. But Alistair Milne, chief investment officer of the Altana Digital Currency Fund, said that the rapid correction was “inevitable — you simply don’t go up this quickly and sustain it forever, followed by consolidation”.

He added: “This is not 2017’s boom and bust, we haven’t seen new retail investors coming in as we did [then].”

Other digital currencies including Ethereum and Litecoin were also trading lower, according to cryptocurrency information provider CoinDesk, having been swept higher by the euphoria surrounding bitcoin. 

Analysts said the bout of enthusiasm for virtual currencies had been stoked by a confluence of factors.

Among the most significant is Facebook’s move into the world of crypto, launching its own currency called Libra in an attack by big tech on the payments industry. Analysts are optimistic that Libra could help cryptocurrencies generally gain more mainstream acceptance, as means of payment and as a store of wealth.

“Adoption is obviously key for this space so the Facebook news is . . . being viewed positively,” said Craig Erlam, senior market analyst at Oanda. Mr Erlam added that bitcoin had struggled for legitimacy among traders since the last crypto bubble burst at the end of 2017, prompting the bitcoin price to plunge about 80 per cent from its peak of more than $19,000.

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