Bitcoin Plunges Below $5,000

Bitcoin has fallen to below $5,000 (£3,889) in value, raising fresh questions about the cryptocurrency’s future.

The fall on Monday came amidst a sharp drop in the value of Bitcoin and other cryptocurrencies over the past week. Bitcoin was last valued at $5,000 more than a year ago, in October of 2017.

CoinDesk’s bitcoin price tracker showed the cryptocurrency falling to below $5,000 on Monday, a decline of about 10 percent during a 24-hour period.

The currency fell further on Tuesday, dropping briefly to about $4,200 on Tuesday morning before recovering later in the day, according to Coindesk.

Sell-off

The decline also marks a roughly 75 percent drop since late last year, when it was briefly valued at nearly $20,000, followed by a sell-off after Christmas.

The latest decline values all Bitcoin in existence at under $87bn.

Other cryptocurrencies, including Ripple, Ethereum, Bitcoin Cash, Stellar and Litecoin also declined last week and at the beginning of this week.

On Thursday, 15 November, Bitcoin Cash — itself a fork of Bitcoin that was created in mid-2017 —  forked again into two competing currencies, Bitcoin Cash ABC and Bitcoin Cash SV.

This fork, like that of last year, resulted from the inability of currency miners and developers to agree on the direction in which they wished to take the currency.

The latest fork has caused concern in cryptocurrency circles, and led to a sharp one-day decline in Bitcoin’s value.

The currency then stabilised at around $5,500 until dropping again late on Monday, as industry analysts issued a raft of warnings about it and about the future of cryptocurrencies in general.

US-based cryptocurrency exchange Kraken said in a blog post that it considers Bitcoin Cash SV an “extremely high-risk investment”.

Analyst warnings

Accounting giant KPMG said last week that it considered using cryptocurrencies as a way to store value to be a “fool’s errand”, while analysts polled by Bloomberg said Bitcoin’s price could fall a further 70 percent to only $1,500.

Underlying the long-held scepticism of cryptocurrencies by governments and many financial analysts is a question of economic theory.

As the Financial Times has put it, something that can be replicated indefinitely “must lack long-term value”.

Bitcoin sought at the beginning to get around this question by designing in a strict limit of 21 million Bitcoins, a limit it was estimated would be reached around the year 2140.

But the the multiplication of other cryptocurrencies, and now Bitcoin’s recent forks, have evidently brought such questions back to investors’ minds, industry observers said.