Blue sky traders bitcoin
Posted On 08.07.1955
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Do the crises in Argentina and Turkey spell danger for emerging markets as the strong dollar stings? Bitcoin lost almost half its value in a week as panic selling gripped the online currency just as fears grew punters were being allowed to buy it using a credit card. In a frenzy of frantic trading the value of bitcoin fell more than 25 per cent yesterday alone, before swinging up and down wildly as dread gripped the market that a bubble had burst. The currency is now officially in what traders call a bear market, having plunged so heavily in value. The wild swings come as the Mail can reveal that online trading websites including major exchange Coinbase, which has an estimated 11.
7m users, were allowing customers to pay for the digital currency with a Visa or Mastercard credit card. Is the great US stock boom about to end? It means that many buyers may be borrowing money at high interest rates to put into the currency, just as its value collapses. It could leave many nursing huge losses as well as debts. Borrowers could be unable to pay back what they owe if the price crashes, with unpredictable consequences for the wider banking system.
Danny Cox, of Hargreaves, said: ‘Borrowing to invest is complete lunacy. The risk is that you get people buying this stuff and paying huge interest rates of up to 25 per cent. If they make losses then they’ve got huge amounts of interest to pay on top. 5,000 in a matter of hours yesterday, in a pre-Christmas rollercoaster which led to fresh fears of a toxic bubble. 10,835 yesterday, according to price-tracker website Coinbase. This plunge follows a year in which speculators piled into the currency, ignoring warnings from central banks and seasoned traders that they could lose everything when the market turns. But on discussion website Reddit, traders fretted that there could be further falls to come.
I seriously hope bitcoin can recover from this nightmare,’ wrote one. Another said: ‘I’m not sure how much I want to allocate to this dip but I just keep buying. Senior figures from legendary investor Warren Buffett to chief executive of the Financial Conduct Authority, Andrew Bailey, have warned that bitcoin could suddenly crash and trigger massive losses for investors. And many are warning about the dangers of borrowing to get in on the investment fad.