The cryptocurrency is in the midst of its worst week since March last year as some analysts fear for its future. Bitcoin fell as much as 6.8 percent to about £23,000 before hitting £30,000 on January 8 – but has since sunk further to around £21,000. Currently at £25,000, the constantly changing value is leading to concern from some. As Bloomberg reported today, the swings are reminiscent of 2017, when the cryptocurrency entered a “rapid collapse”.
With some fearing another crash could be on the horizon, 2017’s Bitcoin blow-up could be set for a repeat.
When the crash occurred in December 2017, the cryptocurrency lost a quarter of its value in one day’s trading.
Its value slumped to around £8,500 at one stage, with one researcher warning at the time that new traders could be put off by the unpredictability.
Jasper Lawler, head of research at London Capital Group, said: “Bitcoin investors were introduced to the law of gravity over the last 24 hours.
“Long term holders will be used to this level of volatility but newer crypto traders could be permanently put off.
“The exponential price rise seen recently needs new investors to sustain it. In a bubble market it’s known as the ‘bigger fool’ theory; you can buy high as long as there is a fool willing to buy it off you even higher.”
Now, fresh warnings are being dealt to traders after yet another seismic drop in value.
The value of Bitcoin dropped by 20 percent over the weekend, provoking Britain’s Financial Conduct Authority (FCA) to warn investors of the risks.
They said: “If consumers invest, they should be prepared to lose all their money.
“Some investments advertising high returns from crypto assets may not be subject to regulation beyond anti-money laundering.
“Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.”
FCA’s executive director of enforcement and market oversight Mark Steward also spoke to the This Is Money website about Bitcoin.
He added: “There are potential benefits to crypto assets, such as in cross-border payment services, and the Government is holding a consultation on how these can be harnessed.
“But we should be in no doubt there are real risks to these investments.
“Anyone interested in crypto assets should remember: promises of high profits mean high risks. Only invest money that you can afford to lose.”
Bitcoin was invented in 2008 by an unknown person. The cryptocurrency has no central bank or single administrator and can be sent from user to user on the peer-to-peer network without the need for intermediaries.
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It isn’t known for sure how many people use Bitcoin, but two of the largest wallet providers, Coinbase and Blockchain.com, have over 35 million users and 59 million wallets respectively.
Bitcoin divides opinion – entrepreneur Elon Musk said last week that he would never turn down being paid in the cryptocurrency.
But Berkshire Hathaway CEO Warren Buffet once said he would never own a cryptocurrency.
He said in February last year: “Cryptocurrencies basically have no value and they don’t produce anything.
“I don’t have any cryptocurrency and I never will.”
Express.co.uk does not give financial advice. The journalists who worked on this article do not own Bitcoin.