Sun | Sep 23, 2018

Host of new worries pushes bitcoin to four-month low

Published:Thursday | June 14, 2018 | 12:00 AM
In this April 3, 2013 photo, Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah. (AP)

The price of bitcoin fell to a four-month low of US$6,370 on Wednesday, days after South Korean digital currency exchange Coinrail said hackers had stolen over US$37 million, or almost a third of the virtual currency it had stored.

After Coinrail announced the theft, the price of bitcoin dropped to US$6,333.95 per bitcoin. It is down US$1,374.10 in the last week, according to Coinbase. At 3:30 p.m., bitcoin was quoted at US$6,306.95.

The decline also follows a Wall Street Journal report that United States regulators have asked virtual currency exchanges to provide trading data to aid an investigation into virtual currency manipulation. The reports raised concerns about the future of virtual currency markets.

Bitcoin is known for its volatility. Last year, the virtual currency increased sixfold in value and hit a record high of US$19,783 per bitcoin in December. By February, its value had already fallen back to around US$5,900.

Bitcoin is "a classic case of an economic bubble," says David Jones, chief market strategist at Capital.com. As the market dropped back down, interest waned.

On Wednesday, The New York Times cited a paper by academic researchers that found last year's price bubble may have been caused by one digital currency exchange known as Bitfinex. The researchers found patterns where bitcoin's prices would be supported any time Bitfinex would issue more of its own digital currency, Tether, which was supposed to be backed up one-to-one with dollars.

The theft at Coinrail is not the first time a digital currency exchange has been broken into. The most famous example was Mt Gox, which got broken into in 2014. Thieves were able to steal US$480 million in digital currencies. Another exchange, Coincheck, had at least US$400 million stolen in digital currency earlier this year.

AP