Bitcoin Dives on Dimon’s Fraud Warning
$JPM, $BTCUSD, $ETH/USD
Wednesday, Bitcoin dove by more than 10%, as investors sold the cryptocurrency after a warning by JPMorgan (NYSE:JPM) Chief Executive Jamie Dimon that it “is a fraud” and will eventually “blow up.”
Bitcoin, the original and biggest cryptocurrency, has rallied strong in recent months, hitting a record high at almost 5,000 at the start of September after a more than 5X price increase YTD.
Bitcoin and other cryptocurrencies have been falling since the beginning of September when China’s PBOC banned the issuance of new digital tokens for fundraising purposes, a relatively new phenom known as ICOs (initial coin offerings).
ICOs has fueled the fast ascent in the value of all cryptocurrencies, from about $17-B at the start of the year, to a record high close to $180-B at the beginning of September.
Following the Chinese ICO halt, the market was spooked by reports early this week that Chinese authorities were planning to forbid any trading of cryptocurrencies, the return of money raised from any ICOs, and by a warning on ICOs from Britain’s financial watchdog, raising fears of a wider crackdown.
Mr. Dimon’s warning triggered a further 11% fall in the price of Bitcoin, which had already lost around 15% of its value in 10 days.
The cryptocurrency tumbled to as low as 3,720.01 on the Bitstamp exchange before recovering to trade around 3,810 by 1524 GMT, still down 8.7% on the day.
Most other digital currencies were down also, with Bitcoin’s main rival ether, aka Ethereum, the name given to the project behind the currency, down 10% on the day, according to the data
Mr. Dimon told an investor conference in New York that if any of his traders were found trading Bitcoin he would “fire them in a sec,” and that Bitcoin was “worse than tulips bulbs,” referring to a famous market bubble in the 17th Century.
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