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Bitcoin has lost most of its value this year – Riding the rollercoaster | The Economist

On december 17th 2017 the price of bitcoin on CoinMarketCap, a cryptocurrency exchange, neared $20,000. True believers hoped that was just the beginning. One analyst at a Danish investment bank predicted bitcoin could be worth $100,000 by the end of 2018. The year is not yet over. But as The Economist went to press, bitcoin’s price was $4,223, and trending downwards (see chart). Where bitcoin goes, other cryptocurrencies follow. Ether, the second-most popular cryptocurrency, is down from $1,432 in January to $120 today.

All this marks the deflating of the third cryptocurrency bubble (the others were in 2011 and 2013). The trigger is unclear. Explaining the movements of deep, liquid markets is tricky at the best of times. Cryptocurrency markets are neither. One popular theory is that the the supply of brave buyers willing to take a punt has now been exhausted.

Regulatory interest may be another reason. Cryptocurrencies have long been a haven for fraudsters. Now the law has started to pay attention. America’s Department of Justice is probing price manipulation in cryptocurrencies, which is widely believed to be rife.

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Bitcoin has lost most of its value this year – Riding the rollercoaster.