MARKET REPORT: Crypto investors feel chill as bitcoin plummets

A digital currency sell-off as fears of a ‘crypto winter’ escalated proved to be a bad day for bitcoin. 

Amid further turmoil in the sector, it fell 8.8 per cent to a three-week low, dipping below $20,000. 

Matters were made worse as Ether, the world’s second-biggest cryptocurrency behind bitcoin, tumbled 7 per cent. 

Feeling the chill: The latest slide was another painful setback for the millions of investors who have piled money into cryptocurrencies despite warnings they are risky

The latest slide was another painful setback for the millions of investors who have piled money into cryptocurrencies despite warnings they are risky. 

Analysts said the sell-off could be linked to the US Federal Reserve’s appetite to press ahead with aggressive interest rate rises to combat inflation. 

The news sent shares in London-based bitcoin miner Argo Blockchain down 11 per cent, or 5.05p, to 40.95p. Bitcoin has been volatile for months, nearing $70,000 in November before crashing to $19,000 in June. 

Investment bank Goldman Sachs this year said its value could reach $100,000 in five years if more investors see it as an alternative to gold. And El Salvador and the Central African Republic use bitcoin as an official currency. 

But regulators are concerned about the number of ‘ordinary’ savers and investors with money in crypto. Hargreaves Lansdown analyst Susannah Streeter said: ‘Speculating in cryptocurrencies is extremely high risk and is not suitable for the vast majority. Values are driven entirely by the speculation that in the future they will have a meaningful role in the financial system. 

‘This makes it impossible to attribute a sound valuation to, or to make a call on, their current or future price. Their use as a means of exchange is limited, and until they’re widely accepted, the price will continue to be driven by speculation.’ 

The FTSE 100 climbed 0.1 per cent, or 8.52 points, to 7550.37 but the FTSE 250 retreated 1.2 per cent, or 248.86 points, to 19,887.79. 

A rise in retail sales – up 0.3 per cent last month despite a collapse in consumer confidence – was not enough to lift blue-chip retail stocks. Next slid 2.7 per cent, or 0.7p, to 6164p, B&M fell 2 per cent, or 8.3p, to 48p and Kingfisher dropped 3.3 per cent, or 8.1p, to 239.9p. 

After news surrounding the heartburn drug Zantac thrust pharma firms into the spotlight, shares in GlaxoSmithKline (GSK) lifted 1.7 per cent, or 23.2p, to 1425.2p. 

Rival AstraZeneca rose 2.1 per cent, or 236p, to 11,250p. But Haleon, GSK’s demerged consumer health arm, fell 0.04 per cent, or 0.1p, to 256.1p even though Morgan Stanley rated the stock ‘equal weight’ and issued a target price of 285p. 

On a day of few company updates, brokers flooded London’s markets with recommendations. Mid-cap insurer Beazley fell 0.2 per cent, or 1p, to 588.5p despite Peel Hunt analysts raising the target price to 645p from 550p. 

Mobile phone mast firm Helios Towers dropped 1.2 per cent, or 1.6p, to 137p as analysts at Barclays raised the target price to 175p from 155p following strong half-year results. 

The broker also hiked the target price of defence firm Babcock to 358p from 356p, sending shares up 0.8 per cent, or 2.8p, to 343.6p. 

But recession fears led analysts at Jefferies to sound a cautious note. Bunzl, which supplies disposable tableware, latex gloves and cleaning chemicals fell 0.5 per cent, or 15p, to 3145p after its target price fell to 2900p, from 3000p. 

Compass, the world’s biggest catering firm, also suffered as its target price was lowered to 2000p while Jefferies downgraded both stocks to ‘hold’ from ‘buy. It dropped 1 per cent, or 19p, to 1950.5p. 

Marshalls plummeted 10.2 per cent, or 43p, to 379p as the landscaping firm dropped into the red for a second day

This post first appeared on Dailymail.co.uk