Bitcoin Retreats As Goldman CEO, Fed's Quarles Raise Doubts

Shutterstock photo

Bitcoin continued to trade wildly on Thursday, a day after swelling past $11,000 and then face-planted at below $10,000, as Goldman Sachs ( GS ) CEO Lloyd Blankfein said the cryptocurrency doesn't meet traditional standards for money while a top Federal Reserve policymaker said Bitcoin is a "niche product."

[ibd-display-video id=2994904 width=50 float=left autostart=true] The digital currency, ever sensitive to price swings and the emotions of big and small investors alike, was down 2.8% to $9,540.14 in afternoon trading after sinking to $9,021 intraday. Etherium, another cryptocurrency, was down 2.4% to $427.51, but off their worst levels too.

Last week, Bitcoin hovered in the $8,000 range. The latest big price swings come as more smaller, less sophisticated investors, curious about the hype, hop aboard and then bail on what has become a wild ride this year for the cryptocurrency.

Goldman Sachs CEO Lloyd Blankfein said Thursday that it's too soon for his bank to develop a Bitcoin strategy, and questioned calling the digital instrument a "currency."

"Something that moves up and down 20% in a day doesn't feel like a currency, doesn't feel like a store of value," Blankefein told Bloomberg Television .

Goldman's commodity chief said Wednesday that Bitcoin should be treated as a commodity.

Federal Reserve Vice Chairman for Supervision Randal Quarles said Thursday dismissed the idea that Bitcoin could be a major rival to established currencies or that the Fed itself would issue its own cryptocurrency.

"Digital currencies are a niche product that sometimes garners large headlines," Quarles said. He warned that digital currencies could pose "serious financial stability issues" if they became widely used.

A Bank of England official on Wednesday downplayed the risks of the cryptocurrency, but urged caution nonetheless.

"This is not at a size where it's a macroeconomic risk to the global economy," Jon Cunliffe, a deputy governor with the central bank, told BBC Radio 5 Live, according to the Guardian, "but when prices are moving like that, my view would be investors need to do their homework."

But Joseph Stiglitz, the World Bank's former chief economist and a Nobel Prize winner, told Bloomberg on Wednesday that "Bitcoin is successful only because of its potential for circumvention, lack of oversight. So it seems to me it ought to be outlawed."

David Mondrus, CEO of the blockchain company Trive, took issue with that comment.

"Yes, circumvention of third parties, including government is one of the major uses/cases of Bitcoin," he said in an emailed statement on Wednesday, "but it is precisely because of the failure and overreach of such parties that it was invented."

He added: "Maybe it's time we stopped relying on third parties, governments and regulators to keep us safe and relied on ourselves."

Also Wednesday, U.S. authorities appeared to tighten the screws on the cryptocurrency. A federal court in California has told the trading platform Coinbase to submit to the IRS information about anyone who has moved $20,000 or more through their accounts annually between 2013 and 2015, according to the Verge.

Bloomberg reported Wednesday that the biggest declines that day occurred as some trading platforms experienced hiccups in service amid some immense traffic volumes.

Despite the growing skepticism, Nasdaq ( NDAQ ) and Cantor Fitzgerald plan to launch Bitcoin futures, following similar decisions by CME Group ( CME ) and CBOE ( CBOE ).

Crypto-related stock and investments were also volatile in the stock market today , including Bitcoin Investment Trust ( GBTC ), Overstock (OSTK), Riot Blockchain (RIOT) and Marathon Patent Group (MARA).

Bitcoin investment vehicle Bitcoin Investment Trust rose 1.4%, rebounding from much-steeper losses. Overstock, which takes Bitcoin and has focused more on the record-keeping technology behind the cryptocurrency known as blockchain, lost 9.4%. Marathon Patent, an IP licensing firm set to acquire the cryptocurrency miner Global Bit Ventures, bounced back 3%. Riot Blockchain, which manages record-keeping technology behind bitcoin , gained 3%.

Square (SQ), which is testing out letting some Square Cash users buy and sell Bitcoin, rose 0.2%. Nvidia (NVDA) and Advanced Micro Devices (AMD), whose graphics cards are used in the processing of cryptocurrency transactions, rose 2.2% and 0.55%, respectively. Square, Nvidia and AMD were caught up in Wednesday's tech sell-off.


Bitcoin Clears $10,000; Crypto Stocks Are Volatile

JPMorgan CEO Called Bitcoin A 'Fraud'; Now His Bank May Trade Futures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos