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Banks turn on Bitcoin, the ‘biggest bubble’ in history

It was a black Friday for Bitcoin investors with the most popular cryptocurrency falling to below US$7,900 as pressure continued to mount on digital currencies.

Bitcoin has since recovered from Friday’s fall with the cryptocurrency trading at around US$8,300 at the time of writing, still a long way off its December high when it was approaching US$20,000.

January has been a grim month for many cryptocurrency traders as prices fell amid increased warnings and government crackdowns.

The volatility of cryptocurrencies was plainly felt as fears that governments, such as South Korea’s, were looking to ban cryptocurrencies prompted sharp declines according to numerous analysts.

Although South Korean officials have stated that there are no plans to ban cryptocurrencies, the idea that governments are attempting to regulate them continues to send shockwaves through cyber markets.

The Indian Government has stepped up its offensive on cryptocurrencies following crackdowns in South Korea, the United States, and Europe.

But it’s not just governments turning on cryptocurrencies.

Giant US banks JPMorgan Chase & Co, Bank of America Corp. and Citigroup, have stated that they are halting credit card purchases on cryptocurrencies.

JPMorgan enacted its ban on Saturday as the bank is keen to avoid the credit risk associated with such transactions, according to Bloomberg.

Adding to Facebook’s ban on ICO advertising, the latest developments cannot come as good news for the blockchain world.

And Nouriel Roubini, also known as ‘Dr Gloom’ and credited with forecasting the Global Financial Crisis, has followed other leading voices in the finance world such as Warren Buffett and issued a dire warning for those with stakes in Bitcoin.

The New York University economist told Bloomberg that Bitcoin was the “biggest bubble in human history”.

It’s not only Bitcoin the top economist has frowned upon, criticising other cryptocurrencies by stating that “most of them are even worse” than Bitcoin.

Nouriel Roubini also took aim against blockchain stating that its “only application is cryptocurrencies, which is a scam.”

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Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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