The value of bitcoin has fallen over $2,000 this morning, spreading worry across its investment base. The drop, which appears to confirm expert opinion last week that the cryptocurrency was in a bubble, has led many to speculate a coming crash.
Bitcoin may have received a much-needed value bump in the form of Bitcoin Cash, a spin-off that was widely touted in recent weeks. It was short-lived, however, as Coinbase, the world’s largest bitcoin exchange, announced it would freeze trading of Bitcoin Cash amid allegations of insider trading.
Coinbase, which is headquartered in San Francisco, surprised markets by allowing users to buy, sell and receive Bitcoin Cash on Tuesday. But it suspended trade of the currency shortly after, when watchdogs voiced concern that illegal activity was taking place on social media.
Coinbase CEO Brian Armstrong revealed he had urged staff not to disclose the launch of the Bitcoin Cash deal. But a spike in its value, just hours before the move, suggests they had not taken his advice. “It appears the price of Bitcoin Cash on other exchanges increased in the hours before our announcement,” he wrote in a statement.
It is bad news for Bitcoin Cash, which launched just this August following complaints that Bitcoin transactions were taking too long. And the news will do little to assuage fears that Bitcoin is more susceptible to corruption and volatility that other currencies. Today Youbit, a South Korean bitcoin exchange, went bust after suffering a hack.