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A drastic drop of almost fifty percent in Bitcoin value last week has worried the investors while fears of global crackdown on cryptocurrency is an added woe to those investing in the digital currency.
Peter Boockvar, the Chief Investment Officer at Bleakley Advisory Group, sees the potential for Bitcoin (BTC) to be around for a long time, but with a significant price drop coming when the Bitcoin bubble bursts, CNBC reports.
Last week, Bitcoin fell almost 50%, piercing below $10,000, while other cryptocurrencies took similar spills due to investor fears that regulators could clamp down on them in an effort to curb speculation.
The world’s biggest and best-known cryptocurrency at one point lost 30 percent of its value. Bitcoin, despite some stabilization in late U.S. trading, was half its record peak of almost $20,000 set on the Luxembourg-based Bitstamp exchange a month ago.
‘The Bitcoin nightmare is on the cards’
Boockvar says the cryptocurrency could fall as much as 90%, taking it back to levels it hasn’t seen since Feb. 2017, when prices began their steep climb.
When asked if the stock market would crash in the event of a significant fall in Bitcoin’s price, Boockvar said that any corresponding drop would just be psychological, because Bitcoin is “not something that really is that relevant in a 19 trillion dollar economy.”
However, he adds that people in South Korea, Japan, and the US who have been taking on credit card debt in order to invest in cryptocurrency will be hit hard.
Boockvar told CNBC that the boom in crypto markets can be attributed to easy-money policies of central banks and money printing. These moves make some cryptocurrencies, like Bitcoin, more attractive to investors, due to the fact that they are both finite and safe from debasement and inflation.
People have long questioned whether Bitcoin fits the mold of a traditional “bubble.” Yale economist Robert Shiller, who won a Nobel prize for his work on financial bubbles, used Bitcoin as an example of a bubble in September 2017. However, in January 2018, Shiller then said that he didn’t know what to make of Bitcoin, adding that it could be around for another 100 years.
Bitcoin briefly tumbled to a low near $10,050 on Coinbase Monday afternoon ET, marking a loss of about 11 percent over the last 24 hours.
Bitcoin traded near $10,192 on Coinbase, the leading U.S. marketplace for buying and selling major digital currencies.
Ethereum fell below the psychologically key $1,000 level again and traded about 10 percent lower near $943, according to CoinMarketCap.
Ripple, the third-largest digital currency by market capitalization, fell about 14.5 percent to $1.18, according to CoinMarketCap.
The price decline came as some details emerged on cryptocurrency regulation in South Korea, where the government has been trying to limit excessive speculation.
The South Korean government said Monday it will collect up to 24.2 percent of corporate and local income taxes from the country’s digital currency exchanges this year.
Nearly all digital currencies plunged in the middle of last week following concerns over increased cryptocurrency regulation in South Korea and China. Bitcoin even fell below the $10,000 level that it first topped in late November.