The price of bitcoin, ripple, litecoin, ethereum and other cryptocurrencies are falling amid fears an increasing number of lenders and finance bodies are shunning them.
US-based bank Goldman Sachs is reported to have shelved plans to establish a cryptocurrency trading desk at its offices, according to Business Insider.
Bitcoin, which is the world’s biggest cryptocurrency, fell nearly 10 per cent earlier this morning and is currently down 4 per cent to $6,419.
Falling: The price of bitcoin is down over 4 per cent this afternoon to around $$6,418.79
In December last year bitcoin was trading at $19,000, but by June this year bitcoin’s price had fallen 6.2 per cent to $5,887.
The price of ethereum has plunged nearly 20 per cent in 24 hours and is currently down 1.56 per cent on the day to around $229.08, while litecoin and ripple both shed more than 7 per cent of their value in recent days.
Craig Erlam, a senior market analyst at FX firm Oanda, said: ‘It’s been a rough 24 hours for Bitcoin and its peers, with reports that Goldman Sachs has postponed launching a crypto-currency trading desk due to the uncertain regulatory landscape.’
He added: ‘The regulatory environment is going to be key to all of this and the fact that Goldman Sachs remains so concerned is clearly a blow.’
Banks like Goldman Sachs are getting the jitters about cryptocurrencies as government finance bodies around the world are making their stances on the craze increasingly clear.
Fluctuations: The price of bitcoin in the last month has swung wildly and is currently down
Shelved? US-based bank Goldman Sachs is reported to have shelved plans to establish a cryptocurrency trading desk
In July, the US Securities and Exchange Commission rejected a second attempt by Cameron and Tyler Winklevoss, founders of crypto-exchange Gemini, to list shares of what would have been the first-ever bitcoin exchange-traded fund.
Outside of the US, Chinese regulatory authorities have imposed a ban on initial coin offerings, which offer companies the chance to raise funds through cryptocurrency. The ban in September last year triggered a 6 per cent dip in the price of bitcoin.
Since then, China has gone even further in its quest to stamp out the flow of cryptotcurrencies and has banned exchanges, social media accounts, news sites and events covering them.
The UK’s Bank of England has also waded into the cryptocurrency debate.
Looking ahead: Warren Buffett has warned bitcoin backers face disaster – and suggested the online currency craze will fail
On its website, the Bank of England warns: ‘Cryptocurrencies do pose risks to investors and anyone buying cryptocurrencies should be prepared to lose all their money.’
Legendary investor Warren Buffett has also warned bitcoin backers face disaster – and suggested the online currency craze will fail.
Buffett said: ‘In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending. When it happens or how… I don’t know.’
JPMorgan Chase & Co’s chief executive Jamie Dimon called called bitcoin a ‘fraud.’
Despite warnings about the risk of losing vast sums of money, the number of Britons who have been tempted by the prospect of hefty returns via cyrptocurrencies has surged over the last few years.
This is despite warnings of a bubble and many not truly understanding how the digital currencies work or how they fluctuate.
Anyone considering taking a punt on cryptocurrencies should do their research and be aware that they may end up losing more than they put in.
Ethereum price: A three-month chart showing how the price of ethereum has fluctuated
If you do buy into bitcoin
Find out how bitcoin and the blockchain works, so that you have some understanding of the system, the ledger, the major players and the public and private key elements.
Remember bitcoin yields nothing and its main source of value is scarcity. Most bitcoin activity is trading not investing.
Research coin wallets, the digital vaults where cryptocurrency is held, and consider security carefully. Bitcoins have been stolen before, understand how this happened.
Be prepared for extreme volatility. The price can move by 20 per cent in one day and you could easily lose half of your cash in a far quicker time that investing in the stock market.
Consider how you would cash in any gains. There are reports that this has proved hard for some people. A time of market stress could lead to people being locked in and unable to trade.
Read our guide to How to be a successful investor, which looks at the far less high octane world of long-term investing and how to make it a success.