Bitcoin wild ride may only get crazier
Bitcoin went on a wild ride on Friday, as we saw a series of plunge and gains in the cryptocurrency value. After losses over the last few days, Bitcoin fell as much as 30 percent overnight in Asia, and it resulted in Coinbase suspending trading.
Experts have been warning that bitcoin is a bubble about to burst, but things might get a bit more crazy before it does: A lot of people have heard of bitcoin by now, but very few people own it.
Brett Ewing, chief market strategist for First Franklin said:
Ewing said about 40 percent of the bitcoin belongs to just 1,000 people, and hedge funds and other major investors are going to start buying it soon. "I think investors should approach it with caution and I think many people will dive into it not understanding what it is," he said.
As bitcoin skyrocketed this month, the volume of trading was unprecedented as investors hoping to catch a ride up piled in. Prices have risen so fast, the Friday returned the price of bitcoin only to where it was trading two weeks ago.
The volatility has is unpredictable. Some companies that have added the word "bitcoin" or related terms to their names to get in on the action. The craziest thing is, it's worked.
Long Island Iced Tea Corp. until this week had been known for its peach-, raspberry-, guava-, lemon- and mango-flavored drinks. Then, on Thursday, the company announced a radical rebranding. It's changing its name to Long Blockchain Corp., shifting its primary focus from iced tea to "the exploration of and investment in opportunities that leverage the benefits of blockchain technology."
Blockchain is a ledger where transactions of digital currencies, like bitcoin, are recorded. Shares in Long Island Iced Tea soared 200 percent in one day.
The Securities and Exchange Commission came out with a statement last week warning investors to be careful with bitcoin and other digital currencies. The Commodities Futures Trading Commission has proposed regulating bitcoin like a commodity, similar to gold or oil.
Source: abc news