Gloom grips cryptocurrency world as bitcoin selloff continues

Cryptocurrencies resumed their slump on Monday, with bitcoin falling toward US$5 000 in the wake of a split of one of the largest major tokens.

Bitcoin touched an October 2017 low and was trading at $5 235.17 at 8.50am in London, according to consolidated Bloomberg pricing. Rival coins including ether and litecoin also retreated, as the wider Bloomberg Galaxy Crypto Index fell as much as 6.9% to a one year-low on a closing basis. XRP, the token associated with ripple, was the lone gainer among major digital currencies.

Volatility has returned to cryptocurrencies, with the largest tokens shedding billions in market value since the hard fork of bitcoin cash last week, after two software development factions failed to agree on a way to upgrade the offshoot of the original bitcoin, leading to a computing power arms race.

The cryptocurrency industry has now lost more than $660-billion in value from a January peak, according to data from CoinMarketCap.com. Bitcoin is down more than 70% from its December 2017 high, the data shows.

Thomas J Lee, managing partner at Fundstrat Global Advisors and a long-time crypto bull, slashed his year-end price target for bitcoin to $15 000 from $25 000. The target is based on a fair value multiple of 2.2 times the breakeven cost of mining, which the firm pegs at $7 000, according to a report last week.

“Crypto-specific events have led to greater uncertainty in the crypto market, including the contentious hard fork for bitcoin cash,” Lee said in the note. Bitcoin’s break below $6 000 “has lead to a renewed wave of pessimism”, he said.  — Reported by Eric Lam, (c) 2018 Bloomberg LP