Bitcoin started the new trading year by continuing its decline that started toward the end of last year. On Dec. 18, Bitcoin reached an all-time record of $19,511, only to lose as much as 20 percent of its value before settling around $16,000 to close out 2017.
On Monday, the cryptocurrency fell below $14,000, which was nearly a 5 percent decline from its close on the previous Friday. Bitcoin trading was volatile across Asian markets as well. Last year, the world’s most popular cryptocurrency got off to a strong start, which helped fuel the 1,400 percent increase throughout 2017.
Bitcoin futures contracts were introduced to Wall Street in December, which helped increase competition and provide the ability for investors to take short positions in the digital currency. There are many critics who believe Bitcoin is a bubble waiting to burst since it has no underlying intrinsic value.
Jamie Dimon, the chairman and CEO of JPMorgan Chase, said investors will pay the price one day for investing in Bitcoin. Dimon has also threatened to fire any of his employees who trade the cryptocurrency or offer it up as a safe investment to the bank’s customers.
Janet Yellen, the chair of the Federal Reserve, called digital currencies extremely speculative assets that do not provide a “concrete source of value.” However, Yellen does not believe that Bitcoin’s bubble bursting would cause any financial crisis in the U.S.
Warren Buffett, the world-renowned investor, said the bubble will burst since there is no underlying value. Buffett has called digital currencies a “mirage” and said the inflated prices are a real bubble. Other skeptics point out that real currencies should not move by 20 percent overnight. “It is a vehicle for fraud”, claims Lloyd Blankfein, the CEO of Goldman Sachs. Some critics go as far as saying digital currencies should be outlawed.