Bitcoin - live updates: Cryptocurrency falls back below $17,000 after overnight gains

Ben Chapman

Bitcoin continued its volatile journey on Wednesday as it rose above $17,600 overnight before sinking to under $16,800 by 8:20 am London time, according to CoinDesk.

Earlier this week, Bitcoin faced a new threat as South Korean authorities reportedly mulled a complete ban on bitcoin and other cryptocurrencies.

The Nikkei Asian Review cited a South Korean Ministry of Justice official as saying that the measures were being considered in order to protect people from scams.

South Korea has been one of the keenest adopters of bitcoin, helping prices on exchanges in the country to remain above those found elsewhere.

The report appeared to do little to dent bitcoin's price however. The cryptocurrency rose again on Tuesday, hitting a new high of $17,382.64 according to CoinDesk's bitcoin price index, before falling back to below $17,000.

Bitcoin began trading on a major exchange for the first time on Sunday, with new contracts linked to the cryptocurrency surged as much a 26 per cent on the first day of trading.

The futures then eased back to trade up 13 per cent on Monday.

The CBOE exchange in Chicago launched its eagerly anticipated futures contracts at 23:00 GMT. The contracts allow traders to bet on future price movements of the currency.

Bitcoin has witnessed a phenomenal rally in the weeks before the futures contracts were launched, standing at around $16,500 on Monday, having started the year at under $1,000.

Bitcoin fell to below $16,000 on Friday after rising above $17,000 on Thursday as the cryptocurrency's rollercoaster ride continued.

Last week, RBS Chairman Sir Howard Davies became the latest high profile finance figure to make a strong warning about bitcoin.

“Put up the sign from Dante’s Inferno – ‘Abandon hope all ye who enter here’ – I think that’s probably what’s needed,” he said speaking on Bloomberg TV, adding that bitcoin appeared to be a “frothy investment bubble”.

The frenzy to buy the cryptocurrency reached new levels on Thursday, causing Coinbase to experience record traffic that slowed trading. Wallet service, Trezor, also reported issues.

Bitcoin rose more than $4,000 in 24 hours between Wednesday and Thursday. By late morning in London, the price was already up 18.5 per cent on the day to $15,246.79, before passing the $16,000 mark just after 4pm.

Bitcoin has received a boost as the number of established financial players that have indicated that they will begin to offer cryptocurrency-related products continues to increase.

Australian Stock Exchange operator, ASX, said on Thursday that it will start using blockchain to process share transactions. Blockchain is the technology that allows bitcoin transactions to be recorded publicly.

Cliff Richards, executive general manager at ASX, said that moving to blockchain could also be beneficial for Australia’s securities regulator.

“To the extent that it helps them get the reporting details that they need, and potentially move more to more proactive action, we believe that it puts them in a position to do those types of things,” he told Bloomberg.

Bitcoin speculators were also encouraged by the successful recent test of technology known as the Lightning Network. It is hoped the advance will allow bitcoin to work significantly faster by allowing parties to transact outside of the blockchain, with the interaction later sent to the public network. Bitcoin has in the past suffered long-term problems with slow transaction speeds.

Other big players soon to offer bitcoin futures include CME which will debut its tradable bitcoin contracts on 18 December. Nasdaq is planning to offer futures in 2018, according to sources cited by Bloomberg, and Cantor Fitzgerald is also creating a bitcoin derivative,

Bitcoin sceptics say that this will allow bitcoin’s price to come down as short-sellers can begin to bet against the digital currency which has now seen a fifteen-fold increase on its value since the start of the year, when its price stood at less than $1,000.

According to cryptocurrency website CoinMarketCap, the total value of all cryptocurrencies has shot up to more than $390bn, from $17.7bn at the start of the year.

This article is being regularly updated to reflect the price of bitcoin