Cryptocurrency has taken a bashing again – and much of the problem was self-inflicted.
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The price of Bitcoin has tumbled after flirting within grasp of a new year high of $14,000.
The exchange rate is now struggling to maintain $9,500 after losing 8% of value in a day.
The slump follows a sustained attack from the White House, with President Donald Trump attacking Bitcoin as worthless with a price based on thin air,
Then Treasury Secretary Steve Mnuchin took on the might of social media giant Facebook by labelling CEO Mark’s Zuckerberg’s plan to launch a cryptocurrency called Libra as a ‘national security issue’.
Body blows for Facebook’s Libra
Both Trump and Mnuchin landed some body blows to the Facebook proposal by warning they would never allow Libra to become a legal, recognised currency that could undermine the dominance of the dollar.
As if these comments were not enough to make reasonable investors understand cryptocurrency still has a long way to go before acceptance as a traditional currency, Tether did the rest.
A fat-fingered $5 billion glitch almost destroyed cryptocurrency in one fell swoop.
A routine $50 million transfer of Tether between two exchanges became a major disaster when someone accidentally added an extra zero to the transaction, so when the transfer button was pushed the deal became half a billion dollars.
Luckily, the mistake was spotted in time and the abort switch clicked in, but not before the Tether administrators had to burn $4.5 billion of the cryptocurrency to balance the books.
$5 billion fat finger error
“An incorrect amount of USDT was accidentally minted, and this has since been resolved to the intended value,” said a brief statement.
An inquiry later revealed the team processing the transfer had trouble with their decimal points because they were working across two or three blockchains running on different cryptocurrencies.
Bitcoin and Tether are not the only cryptos to struggle.
Ethereum is in a fight to stay above $200 and other alternative coins and tokens are also flirting with another drop in value.
The only certainty for cryptocurrency looks like more uncertainty, which is good for traders harvesting profits from the margins but a poor position for consumer investors.
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