In recent times, bitcoin has fallen by more than 6.5 per cent, as investors sold the cryptocurrency after a warning by JPMorgan chief executive Jamie Dimon that it “is a fraud” and will eventually “blow up”.
Bitcoin, the original and still the biggest cryptocurrency, has been on a tear in recent months, hitting a record high just below $US5,000 at the start of September after a more than fivefold increase in price since the start of the year.
The price of bitcoin, the largest digital currency, fell 6.5 percent on Wednesday, to $3,916.66 — the sixth straight day of losses. It still remains up 550 percent over the past 12 months.
The JPM report, written by analyst Marko Kolanovic, is a skeptical take on the entire $150 billion cryptocurrency market.
“While we don’t know whether the price of cryptocurrencies will go up or down in the near term, the history of currencies, governments and financial fraud tells us that the future for cryptocurrencies will likely not be bright,” Kolanovic wrote.
One of the central selling points of cryptocurrencies is negated when someone creates a brand-new bitcoin knock-off, Kolanovic wrote.
That makes it so a coin’s creator can own the most with little effort, while everyone else scrambles for a decreasing slice of what’s left — a classic attribute of a pyramid scheme, he wrote.
On Tuesday, Dimon compared the rising price in bitcoin to a bubble, and something that was only useful for drug dealers and countries like North Korea.