Bitcoin continues to dive as regulatory threats mount, experts clash

Bitcoin fell below $8,000 on Friday for the first time since November as an already straining year for cryptocurrencies continued with an US regulatory investigation and attack from economist Nouriel Roubini.

Bitcoin plunged 10.5% to below $8000 following reports that the US Commodity Futures Trading Commission was investigating the cryptocurrency’s wild ride to almost $20,000 at the end 2017 rise for signs of market manipulation.

Since being propelled to a peak of $19,511 on 18 December by investor excitement and growing acceptance as futures contracts were introduced in the US, by January saw lose more than half this value as one negative news story followed another, ranging from regulatory threats in South Korea, China, India and the US, a $500m heist at Japan's Coincheck, fears of price manipulation and Facebook's ban on cryptocurrency ads.

But Naeem Aslam, chief market analyst at ThinkMarkets, seems to think the bubble may not yet be ready to burst.

"Surely, we have seen many nervous investors in the market today. But this is an opportunity for those who know how to buy low and sell high, on the outset it may look like this is like catching a falling knife, it may very well be as well, but the fact is that the bubble isn’t burst yet," Aslam said on Friday, pointing to Amazon's potential entry into the space as one factor that was "massively underpriced" by traders.

However, Nouriel Roubini of Roubini Macro Associates, declared Bitcoin to be the "biggest bubble in human history", and that this "mother of all bubbles" was finally going the way of the dodo.

It wasn't just Bitcoin that was on Roubini's hitlist, as he went on to say that of the more than 1,300 cryptocurrencies and initial coin offerings available, "most of them are even worse" than the largest digital token.

The NYU economics professor stressed that blockchain had "been around for 10 years, and the only application is cryptocurrencies, which is a scam".

Connor Campbell, a financial analyst at SpreadEx, said the CFTC news was not what a "delicate" Bitcoin needed after "horrorshow week" after regulation changes in South Korea and news that Facebook is banning adverts for the product on its site.

The US commodity trading regulator hit Bitfinex and Tether, a virtual-currency venue which claims to issue a widely traded coin paired to the dollar, with subpoenas on 6 December.

While Tether claims all of its coins are backed by a reserve of US dollars, the company has yet to offer up any evidence of its holdings to the public or allow its accounts to be audited, making sceptics question as to whether or not there really is any money out there.

"We routinely receive legal process from law enforcement agents and regulators conducting investigations," Bitfinex and Tether said on Tuesday. "It is our policy not to comment on any such requests."