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Bitcoin Crashes for Second Time in One Month, Losing More Than $300

June 26, 2017 at 18:52 by Yahia Barakah

The price of Bitcoin tumbled on Monday to the lowest level in more than a week, following a sharp decline by another digital currency last week. Bitcoin’s decline over the weekend seem to have stemmed from a flash crash that Ethereum had on Wednesday, which reduced the value of the Bitcoin alternative cryptocurrency from about $296 to 10 cents in a matter of minutes.

Since its flash crash, Ethereum managed to recover to the level it was at ahead of the massive drop, which placed it back to more than 3,500% gain in 2017 so far. However, the rapid up and down movements undermined confidence in the Bitcoin rival, which returned to losses on Monday even as a major exchange announced credit for clients who lost funds due to the flash crash.

Meanwhile, Bitcoin had reached $2,789.0 on Wednesday, which was the highest level since June 12, before moving south over the weekend to reach below $2,400 today. The latest decline follows a rally of more than 200% since the beginning of the year as wider acceptance of the blockchain technology supported the virtual currency.

Demand from China, South Korea, and Japan has propelled Bitcoin higher and now continues to underpin the digital currency. However, a number of analysts, including Goldman Sachs Group’s chief analyst Sheba Jafari, believe that the Bitcoin price is experiencing a valuation bubble. Jafari warned of a massive corrective drop that would bring the price of the cryptocurrency below $2,000.

Nonetheless, some investors remained bullish on Bitcoin in anticipation for stronger adoption in the near future following Japan’s legalization of the digital currency in April. The US Securities and Exchange Commission rejected proposals of two Bitcoin exchange traded funds in March, but later said it will review the decision it made about one of the two proposals. No further rulings came out of the commission as of today.

BTC/USD declined to 2,348.9 on the Bitstamp exchange as of 18:40 GMT on Monday, the pair’s lowest level since June 16, from 2,493.6 when trading began today.

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