Bitcoin fell over 10 per cent over the weekend following criticism of Facebook’s proposed digital currency from powerful figures including US President Donald Trump and chair of the Federal Reserve Jay Powell.
The world’s largest cryptocurrency had rebounded slightly to $10,344 shortly after 11am UK time today, according to Bitstamp. It had fallen from $11,409 on Friday.
Facebook’s announcement in June of its plans to build a new currency called Libra put a rocket under bitcoin, which climbed over 50 per cent to almost $14,000 in the nine days after the social media giant revealed its plan.
The support of a tech titan for the alternative currency world gave bitcoin new legitimacy and sparked hopes of renewed interest in cryptocurrencies.
However, Trump added his voice on Thursday to the growing chorus of criticism of Facebook’s proposed payments system, which it calls a cryptocurrency.
He said it “will have little standing or dependability” and said the social media giant must become subject to banking regulations if it wants “to become a bank”.
He also directly criticised bitcoin and other cryptocurrencies, saying they “are not money” and are “highly volatile and based on thin air”.
But it was comments from Powell on Thursday that caused bitcoin to fall sharply. The Fed chair said Libra “cannot go forward” until concerns about its safety and legality are addressed.
“Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability,” he told a congressional committee.
Bank of England governor Mark Carney also fired warning shots at Facebook on Thursday. He said Libra had to be “rock solid from the start”.
He emphasised that because it could become a hugely pervasive “systemic payment system”, standards had to be very high.
Bitcoin was also hit by reports over the weekend of a $32m (£25m) theft from a “crypto exchange” and arrests at a Chinese cryptocurrency mining firm.
Craig Erlam, senior market analyst at Oanda, said: “It’s been a rocky few days for cryptocurrencies.”
He said bitcoin could react badly if Trump’s “attacks are repeated, as they often are”.