- Bitcoin price briefly drops below $US9,000 per coin on Thursday afternoon.
- It bounced back a little, but remained more than 10% lower on the day.
- Recent falls are largely down to market fears after reports that cryptocurrency exchanges Bitfinex and Tether being subpoenaed by US regulators in December.
- Bitcoin also seems to be negatively impacted on the day by a speech from India’s finance minister, in which he said that the country’s government doesn’t recognise bitcoin as legal tender.
LONDON – Bitcoin briefly dropped below $US9,000 per coin on Thursday afternoon, having earlier broken below the psychologically significant $US10,000 level for the third time in two weeks.
The cryptocurrency has hovered around the $US10,00 mark for most of the week, yoyoing between sub- and plus-line frequently.
Most recently, on Wednesday it fell below $US10,000 after reports that cryptocurrency exchanges Bitfinex and Tether being subpoenaed by US regulators in December dragged down prices.
It seems as though those concerns are still impacting the market, and on Thursday afternoon, it dropped below $US9,000, before rapidly recovering to plus-$US9,000, as the chart below shows:
Concerns have been swirling in the cryptocurrency market for months about the status of Tether, a cryptocurrency issued by Tether Limited. It plays a central role in the operation of many leading cryptocurrency exchanges, including Bitfinex, but there is speculation that the company behind it may not hold the dollar reserves it claims.
Mati Greenspan, an analyst at eToro, believes the crypto markets are overreacting to the Tether news, saying in an email: “Several clients have already approached me asking what the ramifications could be, but honestly, I really don’t see the big deal.”
“Firstly, the US Government has been creating USD out of thin air for the better part of the last decade without having any major negative impact on the Dollar’s price or it’s ability to be used as a medium of exchange.” “Secondly, even if market players do lose confidence in Tether and it goes to zero, what’s the worst-case scenario for Bitcoin and other cryptocurrencies? All it means is that alternative investors will prefer to rotate out of Tether and into other coins.”
Bitcoin also seems to be negatively impacted on the day by a speech from India’s finance minister, in which he said that the country’s government doesn’t recognise bitcoin as legal tender.
“The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,” Finance Minister Arun Jaitley said in his budget speech.
Elsewhere in the crypto markets, ethereum is down 0.5% to trade at $US1,100, while Ripple’s XRP is around 9% lower.
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