Has the bitcoin fever broken?
Bitcoin prices plunged sharply to below $11,000 on Friday, shedding a third of its value in just 24 hours, according to data from CoinDesk.com. It later rebounded slightly to around $12,000 -- but that's still a stunning 25% less valuable than bitcoin was Thursday morning.
Prices had approached $20,000 as recently as Sunday.
The price drop comes on the back of a few days of bad news for bitcoin, which has still soared by more than 1,000% since the start of the year.
On Thursday, a bitcoin spinoff called bitcoin cash was suspended from one of the most popular exchanges after possible insider trading.
Related: What is bitcoin?
Meanwhile, the U.S.'s markets regulator halted trading in a red-hot bitcoin stock.
Earlier in the week, a South Korea-based virtual currency exchange was forced to close its doors after falling victim to two attacks by hackers in the space of a few months.
The incidents have raised questions about the reliability of cryptocurrency markets, which aren't regulated by governments or central banks.
But some argue bitcoin is just taking a breather -- albeit a big one -- after a furious 2017.
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"A correction like we are witnessing today is hardly surprising," said Dave Chapman, managing director of Hong Kong cryptocurrency trading platform Octagon Strategy.
Amid the turbulence Friday, one of the most popular cryptocurrency exchanges, Coinbase, said buys and sells might be "temporarily offline" due to high traffic.
The plunge threatens to take the shine off what's been an incredible year for bitcoin. This time last year the virtual currency was worth less than $1,000.
The rally has been driven partly by the expectation that more and more mainstream investors will begin trading it.
Earlier in December, two major U.S. financial exchanges launched trading in bitcoin futures, which will help give it more clout with big, institutional investors.
Related: Looking to sell bitcoin? It's complicated
Bitcoin's dizzying ascent has prompted a number of high-profile figures in finance and economics to sound the alarm, cautioning that the currency's boom is simply a huge bubble.
Among them are outgoing Federal Reserve Chairwoman Janet Yellen, who described virtual currencies as "highly speculative."
However, Shane Chanel, an adviser at Australian investment firm ASR Wealth Advisers, thinks investors could start shifting their focus to virtual currencies other than bitcoin over the coming months.
"I feel the cryptocurrency madness is only beginning," he said.
CNNMoney's Jackie Wattles contributed to this report.
Bitcoin is booming and so are criminal schemes looking to make money off the trend.
The hype around cryptocurrency is only growing, fueled by the massive rise of bitcoin, the digital currency created in 2009. Its value has skyrocketed by thousands of dollars in the last year, but the price fluctuates regularly.
As the hype grows, so does interest in acquiring digital currency -- both from the general public who might not know much about the technology and hackers who want to profit off it.
"Whenever something gets this much publicity and popularity and there's a potential to make what appears to be free and easy money, the criminal aspects of the world are going to take advantage of it," said Mike Murray, vice president of security intelligence at mobile security firm Lookout.
In order to use bitcoin, you need a digital wallet to receive, send, and store cryptocurrencies. By creating fake wallets, hackers can take advantage of people new to bitcoin and other digital currencies who might not realize the difference between legitimate companies and fake apps.
Lookout recently discovered three fake bitcoin wallet Android apps in the Google Play Store that trick people into sending cybercriminals bitcoin. Some of the apps had thousands of downloads.
Google has since pulled them from the store.
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"They were clearly targeted at people who don't know anything about bitcoin, went on the Google Play Store, and started installing bitcoin stuff on their phone," Murray said.
In addition to fake apps, cybercriminals are creating malware that uses people's computers to generate cryptocurrencies in a process called "mining."
By hijacking a stranger's computer or phone, a hacker puts the work on those devices -- a typically costly and complicated process. Mining requires a lot of computing power to solve complicated math problems, verify transaction records and ultimately receive digital coins.
It's no longer feasible to mine bitcoin with personal computers, but you can do so for other currencies like Monero and Ethereum. Candid Wueest, principal threat researcher for security firm Symantec, said the explosive popularity of bitcoin is further sparking interest in other currencies, and malware creators are exploiting tools to mine them.
According to a report from Symantec, malicious mining activity is on the rise. A hacker can hide malicious code on a website and the site's users become digital currency miners without realizing it.
It can be a lucrative scheme. This week, hackers targeted websites using the Wordpress content management system to infect them with Monero mining malware. The attackers reportedly made at least $100,000.
Digital currency exchanges are also a popular target for hackers. On Wednesday, hackers compromised EtherDelta, a place for buying cryptocurrencies. Meanwhile, South Korean bitcoin exchange Youbit said this week it was filing for bankruptcy after criminals stole almost one-fifth of its clients' holdings in the second major cyberattack on its systems this year.
Carles Lopez-Penalver, intelligence analyst at security firm Flashpoint, said phishing campaigns from hackers posing as cryptocurrency wallets, exchanges, or other websites try to trick people into forking over currency or personal information. Some of these campaigns appear as advertisements on search engines and websites, or in Slack chatrooms where people discuss digital currencies.
Malicious attacks targeting digital currencies and users are only going to get worse, he said.
"The will and drive to target cryptocurrency-oriented industry is here to stay because of the absurd money that has been pumped into it in the past couple of months," Lopez-Penalver said. "It is one of the most targeted industries right now -- it's what cybercriminals are looking for."
Cryptocurrency bitcoin tumbled below $14,000 briefly on the Bitstamp exchange on Friday, down roughly 30% from its record top near $20,000 set at the start of the week.
It was last down 7% at $14,499 but fell as much as 14.7% earlier in the Asian day.
The cryptocurrency, which was at about $1,000 at the year’s start, had surged to a record high of $19,666 on Sunday in the lead up to exchange giant CME Group’s launch of its bitcoin futures. It has since lost about a third of its value.
“Keep in mind that bitcoin has gone up a lot this year, so a correction is always likely,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers in Sydney.
Bitcoin‘s success brought cryptocurrencies to the forefront and has also boosted the profile of its rivals, which offer alternatives to bitcoin.
“A lot of the capital is flowing from bitcoin into alternative coins. You’ve seen companies like Verge and Ripple, which are over 400% in the last week,” Chanel at ASR Wealth Advisers said.
Verge and Ripple are among an array of cryptocurrencies that both emulate and compete with bitcoin.
Stephen Innes, head of trading in Asia-Pacific for retail FX broker Oanda in Singapore, said that there have also been moves out of bitcoin into Bitcoin Cash, a clone of the original cryptocurrency. Oanda does not handle trading in bitcoin.
“Most of it is unsophisticated retail traders getting burned badly,” Innes said on bitcoin‘s recent retreat.
Bitcoin is known to go through wild swings. In November, it tumbled almost 30% in four days from $7,888 to $5,555. In September, it fell 40% from $4,979 to $2,972.
“Trading in bitcoin is akin to gambling, so its movements don’t follow logical patterns,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo.
“Unlike equities and bonds, it is not possible to calculate expected returns on bitcoin, so buying it becomes a gamble rather than an investment.”
While CME and its rival Cboe Global Markets move to list bitcoin futures has given the digital currency some perceived legitimacy, some policymakers remain skeptical.
South Korea’s Financial Supervisory Service said on Tuesday it does not consider bitcoin and other cryptocurrencies to be currencies of any kind.
Japanese Finance Minister Taro Aso said on Tuesday that bitcoin had not been proven as a credible currency.
The price of bitcoin is down more than 25 percent from an all-time high of nearly $20,000 reached this past weekend, market data shows.
Prices fell to as low as $14,502 to start today's trading session, according to CoinDesk's Bitcoin Price Index (BPI), about 27 percent from the all-time high of $19,783 reported on Dec. 17.
Overall, bitcoin has seen several notable price drops following Sunday's gains, including a dip below $17,000 on Tuesday that accounted for a roughly $1,800 drop on the day. Indeed, analysts have suggested that the price could experience continued volatility as 2017 comes to a close and new money, brought in by bitcoin's meteoric gains, exits for fiat.
But, others may be testing the waters in alternative cryptocurrencies, as bitcoin is far from alone in having seen its price recently hit an all-time high.
According to data from OnChainFX, which charts price developments for cryptocurrencies, all of the top-20 coins by market capitalization have seen an all-time high within the past four days. Of those, cryptocurrencies like bitcoin cash, dash and litecoin have since posted declines in the last 24 hours.
Dropping water image via CoinDesk archive
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
