Bitcoin declines as cryptocurrencies take a sudden lurch lower

-A +A

HONG KONG (Jan 10): Cryptocurrencies dropped on Thursday as Bitcoin gave up the US$4,000 level it’s hovered around since the start of the year.

The largest digital currency slumped as much as 6.2% in the European morning, erasing an earlier small gain to trade at US$3,785.17 at 9:28 a.m. in London. The Bloomberg Galaxy Crypto Index, a gauge of the largest cryptocurrencies, fell 7.7% as Bitcoin’s rival tokens, including Ether, Litecoin and XRP, also retreated.

Timothy Tam, co-founder and CEO of CoinFi, a cryptocurrency research firm in Hong Kong, said while there wasn’t an immediate reason for the abrupt sell-off, he did notice a large transfer of about 40,000 Ether into an exchange an hour before the drop.

“Usually transfer of Ethereum onto an exchange indicates an intent to sell, and if there is a sell-off on one exchange it compounds like dominoes to another because arbitragers will sell immediately on the other exchanges as well,” he said in a message.

The cryptocurrency industry took another blow earlier this week after Ethereum Classic, an offshoot of the second-largest digital currency, came under a so-called 51% attack, in which some computers supporting a network falsify transactions. Coinbase Inc, one of the world’s largest crypto exchanges, said Monday it had found “deep reorganizations” of the Ethereum Classic blockchain. Some US$1.1 million in the coins may have been spent twice.

Cryptocurrency prices plummeted in 2018, amid ongoing security concerns and regulatory scrutiny. The industry has erased more than US$700 billion in value from an all-time peak of over US$835 billion last January, according to data compiled by CoinMarketCap.com.