What is a bitcoin worth? Lately nobody knows for sure, but after a wild ride on Friday, it is worth a good deal less than it was on Thursday.
After losses over the past few days, the digital currency fell as much as 30 percent overnight in Asia and the action became so frenzied that the Web site Coinbase suspended trading.
It later made up much of that ground and slumped 9.5 percent to US$14,042 on Friday, according to the tracking site CoinDesk.
Experts say that bitcoin is a bubble about to burst, but things might get crazier before it does: A lot of people have heard of bitcoin by now, but very few people own it.
“Bubbles burst when the last buyers are in,” First Franklin Financial Corp chief market strategist Brett Ewing said. “Who are the last buyers? The general public, unfortunately.”
Ewing said that 40 percent of bitcoin belongs to just 1,000 people and hedge funds and other major investors are going to start buying it soon, but those funds might buy bitcoin and also protect themselves by placing bets that it will fall. Retail investors might just buy it only to see it fall.
“I think investors should approach it with caution and I think many people will dive into it not understanding what it is,” he said.
As bitcoin skyrocketed this month, the volume of trading was unprecedented as investors hoping to catch a ride up piled in. Prices have risen so fast that on Friday, it returned to where it was trading only two weeks ago.
Bitcoin is still difficult to use to actually buy something. The currency has been highly elastic, bouncing back every time it crashes, which occurs about once every quarter. It fell 11.5 percent over two days early this month and 21.5 percent over five days last month.
Curiosity has now driven bitcoin to the futures market, where investors bet on which direction it will go.
Bitcoin futures started trading on two major exchanges — the Cboe Global Markets Inc and CME Group Inc — this month. Those futures fell about 8 percent on Friday.
Michael Novogratz, the former macro manager who has turned into one of the biggest champions of bitcoin, shelved plans to start a cryptocurrency hedge fund and predicted that the digital money might extend its plunge to US$8,000.
“We didn’t like market conditions and we wanted to re-evaluate what we’re doing,” Novogratz said on Friday in a telephone interview. “I look pretty smart pressing the pause button right now.”
Novogratz said he told potential investors last week that he changed his mind, two days before his Galaxy Digital Assets Fund was due to start on Dec. 15.
He cited a growing number of hurdles, including the prospect of buying bitcoin or ether for his clients, while simultaneously selling crypto investments in his personal account.
However, Novogratz, who previously called cryptocurrencies the “biggest bubble of our lifetimes,” is not giving up on them and said he still believes they will be a disruptive force in finance.
Novogratz said that it would take the market a while to recover and bitcoin prices would probably consolidate between US$10,000 and US$16,000 — and would not approach US$20,000 again for at least three to four months.
“When you get kicked this hard, it takes a lot of ice to get the swelling down,” he said.
Additional reporting by Bloomberg
AI BOOST: Although Taiwan’s reliance on Chinese rare earth elements is limited, it could face indirect impacts from supply issues and price volatility, an economist said DBS Bank Ltd (星展銀行) has sharply raised its forecast for Taiwan’s economic growth this year to 5.6 percent, citing stronger-than-expected exports and investment linked to artificial intelligence (AI), as it said that the current momentum could peak soon. The acceleration of the global AI race has fueled a surge in Taiwan’s AI-related capital spending and exports of information and communications technology (ICT) products, which have been key drivers of growth this year. “We have revised our GDP forecast for Taiwan upward to 5.6 percent from 4 percent, an upgrade that mainly reflects stronger-than-expected AI-related exports and investment in the third
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
TECHNOLOGICAL RIVALRY: The artificial intelligence chip competition among multiple players would likely intensify over the next two years, a Quanta official said Quanta Computer Inc (廣達), which makes servers and laptops on a contract basis, yesterday said its shipments of artificial intelligence (AI) servers powered by Nvidia Corp’s GB300 chips have increased steadily since last month, should surpass those of the GB200 models this quarter. The production of GB300 servers has gone much more smoothly than that of the GB200, with shipments projected to increase sharply next month, Quanta executive vice president Mike Yang (楊麒令) said on the sidelines of a technology forum in Taipei. While orders for GB200 servers gradually decrease, the production transition between the two server models has been
ASE Technology Holding Co (日月光投控), the world’s largest integrated circuit (IC) packaging and testing supplier, yesterday announced a strategic collaboration with Analog Devices Inc (ADI), coupled with the signing of a binding memorandum of understanding. Under the agreement, ASE intends to purchase 100 percent shares of Analog Devices Sdn Bhd and acquire its manufacturing facility in Penang, Malaysia, a press release showed. The ADI Penang facility is located in the prime industrial hub of Bayan Lepas, with an area of over 680,000 square feet, it said. In addition, the two sides intend to enter into a long-term supply agreement for ASE to
RSS