Experts Say Bitcoin Bubble Is Bursting, Value To Fall Further

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As Bitcoin suddenly reversed its path to downward from a peak, a leading team of economists predicted that the digital currency has all the hallmarks of a classic speculative bubble, and that it is bursting.

London-based independent economic research company Capital Economics said that the most popular cryptocurrency, which lost half of its value within a month, has a lot further to fall yet.

Bitcoin on Wednesday plunged below $10,000, for the first time in six weeks, as Asian regulators' proposal to clampdown on the digital currency market continued to spark sell-off. The currency had dropped to as low as $9,186.

Although it rebounded above $11,000 Thursday, the highly volatile trading has erased much of its market value. The virtual currency had hit close to $20,000 on December 16.

Regulators in South Korea are mulling a ban on cryptocurrency exchanges, while China is intensifying its crackdown with a possible ban on apps that provide exchange-like services.

It triggered a massive sell-off across the broader cryptocurrency market, also negatively impacting other cryptos such as Ethereum and Ripple.

Experts at Capital Economics dismissed claims that cryptocurrencies will replace established fiat currencies as rubbish.

"Our view is that Bitcoin is a bubble. Indeed, the latest price falls suggest that the bubble is bursting - although with prices still ten times higher than a year ago, they have a lot further to fall yet".

The economic fall-out from this will be small, according to them. "And some long-run good will come of the blockchain technology underpinning the spread of cryptocurrencies, although it remains to be seen how big its effects will be."

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