Bitcoin price plunges $2,000 in 12 hours as year-end rally fizzles out

Bitcoin went into freefall on Friday, its price collapsing from the dizzying heights of nearly $20,000 (£14,965) earlier this week to about $13,000 after its year-end rally appeared to run out of steam.

According to the CoinDesk exchange, the cryptocurrency was trading at $13,155, a fall of over 30% in five days.

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Its price has fallen by more than $2,000 in 12 hours.

It came after a troubled week for bitcoin, in which a cryptocurrency exchange went bust in South Korea following a cyberattack, knocking its price.

Coinbase, another exchange based in the US, also said it was opening an investigation into sharp price increases.

Neil Wilson, a senior market analyst at ETX Capital, said: “Has the bubble finally popped? It’s hard to see the bell tolling just yet. Large price swings have become so normal that it’s hard to decide – we can easily see this market bounce back in very short order.

“Whilst there have been some hacks, public infighting in the mining community, lots of rumoured forks and regulatory pressure building on some fronts, this is likely to be a simple bout of risk-off selling as investors rebalance towards year-end.

“It looks like it’s time to cash in the gains and spend the winnings on a bumper Christmas.”

But it has not all been bad news for bitcoin this week.

US regulators approved futures trading in bitcoin earlier this month and Goldman Sachs is reportedly gearing up to enter the market.

The JP Morgan boss, Jamie Dimon, has branded Bitcoin a fraud, but Christine Lagarde, the head of the International Monetary Fund, said “it may not be wise to dismiss virtual currencies”.

The UK Treasury has announced plans for closer scrutiny of the cryptocurrency as part of EU-wide plans that will require online platforms that trade in bitcoin to carry out due diligence on customers and report suspicious transactions.

But that has not curbed excitement over its emerging investment opportunities.

Despite its Friday flop, the currency was still well up on the year, rising from about $900 in January to about $13,000.