Bitcoin plummets as cryptocurrencies suffer in market turmoil

Bitcoin plummeted on Thursday amid wild volatility in cryptocurrency markets, with traders citing a sell-off across assets as fears of the economic damage from the coronavirus pandemic take hold.

The biggest cryptocurrency slumped as much as 25% during morning trading before clawing back some of its losses. It was last down 22% at $6,206, heading for its biggest daily loss in five years.

Bitcoin has lost over 30% of its value in the last five days, outpacing sharp losses for assets from stocks to oil as the pandemic wreaks havoc on the daily life of millions.

"We`ve seen de-risking across all asset markets," said Jamie Farquhar, portfolio manager at London-based crypto firm NKB. "Bitcoin is certainly not immune to that."

Global stocks plunged into a bear market and oil slumped on Thursday after U.S. President Donald Trump banned travel from Europe to stem the coronavirus.

The highly infectious disease is spreading rapidly in Europe and increasingly in the United States, disrupting all aspects of life from education to entertainment. The World Health Organization described the outbreak as a pandemic for the first time on Wednesday.

Traders cited the rush away from risky assets as driving bitcoin`s fall.

Bitcoin`s slump underlines nagging questions over its practicality as a currency, or as a stable store of value. Those concerns, as well as worries on regulation, have kept mainstream investors away.

Prone to wild and often inexplicable price swings, it has through its 12-year life failed to take off as a means of payment, its use instead mainly limited to speculation.

Other major cryptocurrencies, which tend to move in tandem with bitcoin, also suffered sharp falls.

No.2 coin ethereum fell 27%, while third-largest coin XRP, used in U.S. start-up Ripple`s payments system, tanked 21%.

Bitcoin`s fall has also undermined proponents` claims that it acts as a safe haven in times of geopolitical stress.

"The narrative that BTC is a `safety asset` and is more like a `digital gold` has yet to get proper traction in mainstream markets outside of the crypto community," said Ben Sebley, partner at BCB Group, a cryptocurrency brokerage.

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The steep drop has pushed bitcoin deep into negative territory for 2020, after a strong start to the year.

In the first six weeks of 2020, bitcoin rose by nearly half as investors bet that a combination of arcane tech factors in its code and expectations of mainstream acceptance were leading to a repricing.