Bitcoin (BTC) prices have fallen more than 20% this year, hiving more than $750 from their all-time high, as investors retreated from the crypto currency into the U.S. dollar following Wednesday's rate hike from the Federal Reserve.
Bitcoin hit a low of $2,189 on Thursday before rebounding to around $2,455. The digital currency was down from a record high of $2,954.22 recorded on Sunday. The moves follow a 0.5% gain for the dollar index, which measures the greenback's strength against a basket of six global currencies, since the Fed lifted its key rate for the second time this year to a range of 1% to 1.25%.
Bitcoin prices have surged more than 190% so far this year, according to Bitmap prices, amid a series of developments in the cryptocurrency space that has convinced investors it could soon be a more formalised form of international commerce.
Morgan Stanley, however, doesn't believe that cryptocurrencies such as Bitcoin will be a viable currency in the future, still seeing them more like investment vehicles than anything else. The firm argues that Bitcoin is a "more inconvenient way to pay" for goods and services than using a debit or credit card.
"Most regulators and investors view cryptocurrencies more as assets than actual currencies. Their values are too volatile and too hard to actually use for payment for most to consider them currencies," the bank said in a note that was posted on the Business Insider website. "Our conversations with some merchants indicate that, while cryptocurrencies might actually be attractive for them to operate their businesses, they find that the cryptocurrencies are far too volatile to be used."
Bitcoin shares fell 2.2% on Thursday in the early afternoon.
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