Bitcoin $20 billion in value , Bitcoin at crossroads after shedding,Bitcoin is down 6%, while Ether tokens are down more than 8% , Bitcoin and other digital currencies have been getting absolutely toasted in recent trade, with some wondering if withering criticism from Wall Street heavyweights, like J.P. Morgan Chase’s JPM, +0.29% CEO, and growing regulatory scrutiny in China have finally combined to exact a punishing, and lasting, toll on one of the most bubblicious segments of finance.
On Wednesday, the value of a single bitcoin, near its low, was at $3,772, compared with around $5,000 in early September and representing a roughly $18.5 billion loss of market value in the world’s No. 1 cryptocurrency, according to digital-currency site Coinmarketcap.com. Ether tokens, the second-most popular digital currency, were down more than 11% at $260.13 in recent action. That equates to a loss of more than $11 billion in total value for the currency running on the Ethereum blockchain.
Still, bitcoin’s rise has been dazzling, rallying some 300% so far in 2017. By comparison, the Dow Jones Industrial Average DJIA, +0.18% and the S&P 500 indexSPX, +0.08% are each up by nearly 12% this year, sparking a litany of pronouncements that U.S. equities are too rich.
At least part of the drop in bitcoin is due to excoriating comments made by Dimon on Tuesday, who referred to it as “a fraud”, among other indictments, at a banking conference. He reiterated those remarks at a separate conference later that day.
On Wednesday, prominent investor and market pundit Mohamed El-Erian, chief economic adviser at Allianz Global Investors, added further fuel to bitcoin’s bearish fire, making the case that bitcoin might lose a third or half its value.
“The current pricing assume massive adoption, and I don’t think governments will allow the amount of adoption that’s currently priced in,” he said on CNBC Wednesday morning in New York.
Bitcoin bulls have been up in arms about the onslaught of negative comments. But talk of a bubble and the increased attention on digital currencies, and the underlying blockchain technology, are drawing may signify that the cyberunits are at an important crossroads. That could determine whether bitcoin, or some other cryptocurrency becomes a mainstream instrument, challenging fiat currencies like the U.S. dollar DXY, +0.09% or just a case study in irrational exuberance.
“Dimon says that bitcoin is a fraud because all of the value is being driven by speculation and not utility. There is a grain of truth to that. Bitcoin has not yet seen wide adoption for day-to-day transactions, but the number of transactions occurring across the globe has been rising, particularly in 2017,” said Perry Woodin, CEO of Node 40, a blockchain governance company.
Indeed, bitcoin is making headway across the globe, from the U.S. to Japan and China.
But of late, recent regulatory rumblings out of China have appeared to set the stage for the current pullback in bitcoin and the broader crypto market.
According to The Wall Street Journal, Chinese regulators are planning to shutdown bitcoin exchanges. Although some in the industry have challenged the veracity of those reports, China is a major hub for bitcoin activity, representing about 20% of bitcoin mining and trade, said Charles Hayter, co-founder of CryptoCompare in an interview.
China is cracking down on illicit uses of digital currencies and has also is monitoring so-called initial currency offerings, or fundraising tied to digital-currency ventures that has recently supplanted traditional, early-stage venture investing in 2017.
Read: What is an ICO?
“There has been a free fall of late and it is making everybody quite scared,” Hayter said. He said he welcomes increased regulation from places like the U.S. and China, which may help to legitimize a currency that is in its infancy. But questions abound as to the role China, if any, will play in bitcoin’s outlook.
“China is always an enigma wrapped in an enigma so you don’t always see what’s happening,” he said.
About Dimon’s comments Hayter said, “Bitcoin likes to view that as a ‘poor me excuse.’” Meaning, banks may view digital currencies as a rival to their business models of moving money for a fee.