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Bitcoin recovers after Friday crash

Feb 05,2018
The price of bitcoin rebounded close to 10 million won ($9,200) in Korea on Sunday after plunging to as low as 7.7 million won on Friday, when investors sold off their bitcoin en masse in response to global regulatory pressure on cryptocurrency trading.

As of 6 p.m. Sunday, bitcoin was trading in Korea at 9,827,000 won, according to Bithumb, the country’s largest cryptocurrency exchange. The international average was $9,068.86, according to market analysis site CoinDesk.

On Friday, the global price of bitcoin sank to as low as $7,695.1, slumping below $8,000 for the first time since Nov. 24. Over $100 billion evaporated from the market worldwide in a single day, according to data from CoinMarketCap, which monitors the prices of cryptocurrencies across a number of key exchanges globally.

Bitcoin fell even more severely in Korea - to as low as 7 million won from above 10 million won - within 24 hours on Friday. The so-called kimchi premium, referring to bitcoin trading in Korea well above global rates, turned into a kimchi discount amid uncertainty over the government’s position on cryptocurrency regulations.

The massive fall internationally similarly came as investors were fearful of major governments around the world scrutinizing the cryptocurrency trade. In a matter of hours, they dumped billions of dollars’ worth of cryptocurrencies.

On Jan. 30, news broke that two of the world’s largest cryptocurrency platforms - Bitfinex and Tether - are set to face inquiries by the U.S. Commodity Futures Trading Commission, a derivatives regulator, for allegedly propping up certain coins and artificially boosting prices.

Bitfinex is involved in several cryptocurrencies including bitcoin, while Tether issues a cryptocurrency pegged to the U.S. dollar, which has made it controversial. The company claims that each unit of Tether is backed by $1 held in its reserves, and the cryptocurrency is currently the third most popular after bitcoin and Ethereum, with a market cap of around $2 billion.

Adding to the downward pressure were rumors Thursday that India was banning bitcoin. In fact, the Indian government remains undecided about its cryptocurrency regulations, though Finance Minister Arun Jaitley has been making tough statements about the market in the past few months.

Also on Friday, Japan’s Financial Services Agency, a regulator, raided Coincheck, the beleaguered cryptocurrency exchange that was hacked earlier in the week and lost 58 billion yen ($530 million) worth of customers’ holdings.

There are mixed views on whether cryptocurrencies might be able to reclaim the fervor they had before bitcoin’s “Black Friday.”

Nouriel Roubini, the economist nicknamed Dr. Doom for his acute forecasts of bubbles, offered a pessimistic reading on cryptocurrencies Friday.

“Now bitcoin crashing below $8,000,” he wrote on Twitter, “headed towards $7,000. Down 60 percent from the peak, 40 percent in a month and over 10 percent today. The mother of all bubbles and biggest bubble in human history comes down crashing.”

BY SEO JI-EUN [seo.jieun@joongang.co.kr]


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