Bitcoin has fallen by more than 20% during U.S. trade and is at risk of going through the key $12,000 level again and may even test $10,000. It ended the week at $14,303 taking weekly losses to 33%. It reached a high of $19,511 on earlier this month. Other cryptocurrencies have also plunged including ethereum (down 36%) and litecoin (43%) in the past 24 hours. It is not immediately clear what caused the sudden dive.
However, Ripple, or XRP, was the only major cryptocurrency trading higher as it passed the key $1 level. Ripple uses blockchain technology to develop a payments network for banks, digital asset exchanges and other financial institutions to validate transactions. Second-generations cryptocurrencies, including ethereum, litecoin and XRP have outperformed bitcoin given the costs associated with mining bitcoin.
Cryptocurrencies will remain volatile and trading volumes in recent months have been driven to a large extent by retail investors in South Korea, Japan, China and other parts of Asia through greater recognition. This may create an opportunity to short bitcoin futures either on the Cboe Global Markets or CME as some retail investors may face margin calls and force to sell.
HXL still maintains that bitcoin is an investment bubble and not a viable investment. We also continue to state that blockchain, the technology that underpins the cryptocurrency, is a viable long-term investment.