Bitcoin breaches $200 mark as bubble bursts

Bitcoin breaches $200 mark as bubble bursts

The price of bitcoin is hovering dangerously close to the $200 mark as BTC/USD exchanges creak under pressure from a wave of sell orders from spooked investors.

Exiting 2014 as the worst performing investment measured against all other asset classes, the bad news keeps rolling in for the nascent cryptocurrency, with prices slumping overnight to reach a new low of $179 in early morning trading before rebounding slightly to hit $205 at pixel time.

Order books at the major USD/BTC exchanges are a sea of red, as investors jump ship, fearful of further sharp price falls.

The reverberations from the sell off are already rocking the cryptocurrency community, cutting a swathe through the vast array of startups that piled into the business when bullish sentiment sent the price soaring beyond $1000 at the end of 2013.

Late last year, crypto-mining outfit PeerNova raised $8.6 million in funding to refocus its business on blockchain-based enterprise products as the first indications of a major slump reared.

Yesterday, cloud miner, temporarily suspended mining because the price had fallen too low, while six-month old Delta Financial notified customers that it planned to “cease current services” on 30 January, including its interest-bearing bitcoin account and trading products.

Update The rollercoaster ride for bitcoin continues with the price once again breaching the $200 mark to land at $189 at mid-day. Dr James Smith, co-founder and CEO of UK institutional bitcoin custodian Elliptic believes the very economics of mining may be exacerbating the downward momentum. "Miners have energy bills and other ongoing costs denominated in fiat, and on top of this, many of them have invested heavily in fiat-denominated hardware in recent months," he says. "With fiat liabilities and bitcoin profits, both upward and downward fiat/bitcoin price moves become amplified as miners have to sell more bitcoins on the downside and fewer on the upside to pay their bills."

Comments: (1)

A Finextra member
A Finextra member 14 January, 2015, 10:371 like 1 like

Maybe the old analogy holds true....  There is probably still more money to be made selling shovels, than mining for bitcoins.... Time will tell - certainly Bitcoin would have to go through certain birthpains before it reaches its sunlit uplands...   in a few years would be my guess