Bitcoin Plunges 15% After Rising to $17,000

Bitcoin plunged as much as 15% to below $14,500 on profit-taking Friday, capping a roller-coaster week that saw the currency hit a series of record highs and underlining concerns about its volatility.

The virtual currency, which has no central bank backing and no legal exchange rate, briefly hit a new record of $17,000 before plunging to $14,480 in Asian afternoon trading, according to Bloomberg News. It clawed back some ground and stood at $16,100, AFP reported.

Created in 2009 as a bit of encrypted software, the digital money has been used to buy everything from a soft drink to pizza, and is increasingly accepted by major companies such as booking website Expedia. It has soared more than 50% in just a week and is up from a 2017 low of $752 in mid-January.

Analysts have put the surge down to growing acceptance among traditional investors and a decision by US regulators to allow Bitcoin futures to trade on major exchanges.

But some, including the US Federal Reserve, have warned against dabbling in Bitcoin as it could threaten financial stability, and fears of a bubble have increased as the price has soared.

Until now it has only been traded on specialist platforms, but will debut on Cboe Futures Exchange this weekend before hitting the major Chicago Mercantile Exchange on December 18.

However major derivatives brokerages have raised concerns with regulators that the decision to allow it into mainstream markets has been taken too hastily, and analysts are warning any hitch with its launch could spell trouble.

“If there are any kinds of hiccups, we could easily see a scenario where it falls back by 50%,” Kay Van-Petersen, macro and crypto strategist with Saxo Bank in Singapore, told AFP. But he still expected the currency to keep rising in the long term, predicting its value would hit $50,000 to $100,000 within 18 months.