STREAMING NOW: Watch Now

Bitcoin bloodbath -- cryptocurrency plunges 20% in two days

Bitcoin investors are getting their digital butts kicked lately. Hard. Bitcoin prices have plunged more than...

Posted: Sep 6, 2018 6:48 PM
Updated: Sep 6, 2018 6:48 PM

Bitcoin investors are getting their digital butts kicked lately. Hard. Bitcoin prices have plunged more than 20% in the past two days.

Ethereum, Litecoin, Ripple and other cryptocurrencies have suffered similarly large drops. The reason for the latest pullback? A Business Insider report that investment banking giant Goldman Sachs may be dropping plans to launch a crypto trading desk.

Goldman Sachs told CNNMoney though that it hadn't made a firm decision about bitcoin or other cryptocurrencies just yet.

"In response to client interest in various digital products, we are exploring how best to serve them in the space. At this point, we have not reached a conclusion on the scope of our digital asset offering," Goldman Sachs said in a statement.

But if Goldman Sachs is pulling back, that is not good news.

Naeem Aslam, chief market analyst with ThinkMarkets UK who is bullish on bitcoin, said in an email that "there is no doubt that the bitcoin price is supported by this hype that institutional banks are going to get involved."

Stories first surfaced about a possible Goldman Sachs push into bitcoin and other cryptocurrencies last December, shortly after the two big futures trading companies -- the CBOE and CME -- set up exchanges for bitcoin contracts.

Goldman Sachs confirmed in May that it was thinking of using its own money to start trading bitcoin, according to the New York Times.

Bitcoin prices, which were hovering near a record high of about $20,000 in December, have lost more than two-thirds of their value since then and currently trading at around $6,400.

Hussein Sayed, chief market strategist at currency brokerage FXTM said in a report Thursday that it's possible prices could fall below $5,000.

So it might make sense for Goldman Sachs to take a more cautious approach to this extremely volatile market. Most of the news about bitcoin has been negative lately.

Google, Facebook and Twitter have banned some cryptocurrency ads.

The Securities and Exchange Commission blocked several proposals for bitcoin exchange-traded funds in the past few months, including plans from ETF giants ProShares and Direxion and one backed by the Winklevoss brothers of Facebook fame.

Several publicly traded companies have also tried to latch onto the crypto craze, leading to more concerns that bitcoin could be a bubble. Overstock has de-emphasized much of its struggling online retail business to focus on cryptocurrencies.

Bioptix, a maker of hormones for farm animals, changed its name to Riot Blockchain. The stock surged -- until the company disclosed the SEC was probing it.

Beverage company Long Island Iced Tea morphed into Long Blockchain. It's since been delisted by the Nasdaq and now trades as a so-called bulletin board stock at a price below 20 cents a share.

Some companies also began selling digital tokens through initial coin offerings to raise money.

Eastman Kodak -- yes, the camera and film company -- created its own KodakCoin. There's even a PotCoin for the legal marijuana and cannabis industry.

Many of these initial coin offerings are legitimate. But there have been scams too. The SEC even created a fake ICO called HoweyCoins to show how easy it is for investors to get duped.

And several titans of business have blasted bitcoin as well.

JPMorgan Chase CEO Jamie Dimon has called bitcoin a "fraud" that was only good for drug dealers and North Korea.

Billionaire investor Saudi Prince Alwaleed, whose Kingdom Holding Company owns stakes in Apple, Citigroup and Twitter, told CNBC late last year he thought bitcoin was an "Enron in the making" that will implode.

Warren Buffett and Charlie Munger of Berkshire Hathaway have also warned investors to stay away from bitcoin.

Buffett told CNBC in early May bitcoin was "probably rat poison squared" while Munger said at the Berkshire shareholder meeting that the thought of owning cryptocurrencies was "just dementia."

It's also worth noting that the recent plunge in bitcoin comes at a time when the Turkish lira, Indian rupee and Argentine peso are in freefall mode as the dollar strengthens.

So investors don't seem to be willing to bet on bitcoin as a replacement for fragile emerging markets currencies.

Still, the pullback in bitcoin comes even as more and more businesses and organizations have embraced blockchain technology, the digital ledger that keeps records of transactions in virtual currencies.

IBM is a big proponent of the blockchain. The World Bank has announced plans to launch a blockchain bond. There's even a company that wants to run a fantasy football league using blockchain. (Call me old school. But I'll stick with Yahoo for my league.)

There is a clear difference between bitcoin and blockchain. The future of money may still very well be digital, but that doesn't mean that bitcoin or the scores of other virtual currencies out there will all survive and thrive.

CNNMoney's Julia Horowitz contributed to this report.

New York Coronavirus Cases

County data is updated nightly.

Confirmed Cases: 500677

Reported Deaths: 33435
CountyConfirmedDeaths
Queens766967293
Kings751697390
Bronx553544988
Nassau496632208
Suffolk489982019
Westchester404381470
New York360763195
Rockland17943683
Richmond172521095
Orange13597505
Erie13021713
Monroe7312300
Dutchess5472163
Onondaga5454207
Albany3627136
Broome356683
Oneida2746128
Ulster251895
Niagara2075101
Putnam181263
Sullivan177948
Chemung17433
Schenectady157050
Saratoga134517
Rensselaer109942
Steuben100557
Chautauqua92413
Columbia71038
Ontario66935
Tioga62930
Oswego6274
Tompkins6190
Madison56517
Cortland5470
Greene50518
Cattaraugus5026
Wayne4885
Warren45933
Orleans40654
Otsego4005
St. Lawrence3994
Cayuga3972
Chenango3977
Herkimer39410
Genesee3885
Fulton36224
Washington33614
Allegany3081
Livingston3058
Montgomery2684
Clinton2465
Jefferson2070
Essex1980
Wyoming1885
Delaware1777
Seneca1433
Lewis1270
Schuyler1260
Yates1237
Schoharie1110
Franklin800
Hamilton170
Unassigned019
Utica
Overcast
39° wxIcon
Hi: 47° Lo: 32°
Feels Like: 39°
Oneonta
Clear
36° wxIcon
Hi: 45° Lo: 31°
Feels Like: 36°
Herkimer
Overcast
39° wxIcon
Hi: 47° Lo: 32°
Feels Like: 39°
Thendara
Overcast
39° wxIcon
Hi: 43° Lo: 24°
Feels Like: 39°
WKTV Radar
WKTV Temperatures
WKTV Severe Weather
Click here to learn more about A Healthier Mohawk Valley
VOTE OCTOBER 22-30
Saluting Those Who Are Proud 2 Serve
WKTV Golf Card - Under 150 left