THE value of Bitcoin has slumped to a two-week low today after the US announced it had recovered $2.3million of cyberattack ransomware.
The dive also comes after former US President Donald Trump branded the world’s largest cryptocurrency a “scam”.
The value of Bitcoin is currently sitting at $33,079 – down by almost 10% over the past 24 hours, according to CoinMarketCap.
The last time it was this low was more than two weeks ago on May 23, when it dived to $32,934.
In comparison, it hit an all-time high of almost $63,000 in mid-April.
The price swings are evidence of the volatility around cryptocurrencies, and investors should know it’s not a guaranteed way to make money.
5 risks of crypto investments
BELOW are the major risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
You should never invest in something you don’t understand and only put in cash you can afford to lose, if anything at all.
There’s scant regulation for cryptocurrency firms, so you’re unlikely to have any protection in case things go wrong.
Yesterday, the US Justice Department announced that it had recovered $2.3million of the Bitcoin ransom paid to the Colonial Pipeline hackers after a cyberattack.
The latter caused a widespread gas crisis across the US, with the disruption leading to panic buying and a gas shortage along the East Coast last month.
The FBI later identified DarkSide, a Russia-based cybercrime group, as the culprit behind the hacking.
During an interview with Fox Business yesterday, Mr Trump also said: “Bitcoin, it just seems like a scam.”
“I don’t like it because it’s another currency competing against the dollar … I want the dollar to be the currency of the world.”
He went on to insist that cryptocurrencies should be regulated “very, very high.”
The digital currency is now up only 14% since the start of the year, though it’s still more than tripled in price from a year ago.
The fact that investigators “could trace the untraceable and seize it might be undermining the libertarian, free-of-government-control case,” Jeffrey Halley, a senior market analyst at Oanda, told Fortune.
This, in turn, could have resulted in the price dive as investors sold off their assets, he added.
Meanwhile, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told The Sun: “This latest sharp fall in a matter of hours underlines how volatile the currency is.
“Although many fans are still cheerleading the longer term use case for the coin and its rivals, moves by governments around the world to regulate the crypto space or enter it with stablecoins or alternative central bank digital currencies are causing waves of concern about longer term prospects.
“The payments world is in a state of flux, and the rules of the future game have not yet been drawn up.
“Given speculating in crypto assets remains such a high-risk strategy, traders should only commit money they can afford to lose.”
The latest price swings for Bitcoin comes after China announced a further crackdown on cryptocurrencies last month.
Bitcoin was also dealt a blow in May as Elon Musk said Tesla will no longer accept payments in the cryptocurrency.
The founder blamed the move on the environmental impacts of mining, which is a highly energy-intensive process.
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Last week, thousands of Bitcoin investors descended on Miami for a conference.
During the event, El Salvador President Nayib Bukele announced plans for the country to accept Bitcoin as legal tender.
The value of Bitcoin dropped last week after Mr Musk’s crude “CumRocket” crypto tweet.