When your money makes too much change: bitcoin price plunges
NEW YORK (AP) — What's a bitcoin worth? Lately nobody knows for sure, but it's far less Friday than it was Thursday.
The digital currency slumped 16 percent to $13,133 Friday, according to the tracking site CoinDesk. It fell as much as 30 percent overnight in Asia, and the action was so frenzied that the website Coinbase suspended trading. The steep losses Friday topped a week in which prices fell nearly 40 percent.
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 huge losses Friday returned the price of bitcoin only to where it was trading about two weeks ago.
The volatility has created a circus-like atmosphere, or in the terms of some economists, a bubble that is about to burst. But a lot of investors and companies have clamored for a piece.
That includes companies that have added the word "bitcoin" or related terms to their names.
The craziest thing? 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.
Long Island Iced Tea Corp. is 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 Hicksville, New York, company did what investors are doing, hitching a ride on a cryptocurrency that raced from less than $10,000 at the end of November to almost $20,000 on Sunday. And it cost less than $1,000 at the beginning of the year.
The rise of price of bitcoin, which is still difficult to use if you actually want to buy something, has led to heated speculation about when the bubble, if that's what it is, will burst.
The currency has been, if nothing else, highly elastic, bouncing back every time it crashes, which occurs about once every quarter.
Yet Friday's decline was its biggest one-day drop this year. It fell 11.5 percent over two days in early December and 21.5 percent over five days in November.
Curiosity has now driven bitcoin to the futures market, where investors bet on which direction it will go.
Bitcoin futures started trading on two major exchanges — the Cboe and CME — this month. Those futures fell about 1.5 percent Friday.
If people get burned, it won't be because they were not warned.
The Securities and Exchange Commission put out 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.
Financial Industry Regulatory Authority, a financial watchdog, issued a similar warning recently.