Bitcoin falls below $40,000 as BlockFi mistakenly sends coins worth millions to users

·2 min read
Bitcoin has fluctuated all this week, sinking as low as $32k on Wednesday. Photo: Sheldon Cooper/SOPA Images/LightRocket via Getty
Bitcoin has fluctuated all this week, sinking as low as $32k on Wednesday. Photo: Sheldon Cooper/SOPA Images/LightRocket via Getty

The price of bitcoin fell back below $40,000 (£28,209) on Friday, after paring back losses from a sharp sell-off earlier in the week. 

Bitcoin (BTC-USD) was down over 2% to $39,725 in morning trade in London. It has since regained some ground, up 0.9% to $40,895 on Friday afternoon. 

It comes after crypto lender start-up BlockFi accidentally sent users large amounts of bitcoin as part of a promotion, and is working on reversing it. 

The company made what it called incorrect promo payouts in bitcoin instead of US dollars to customers, however it said a number of users had already withdrawn the coins before BlockFi could backpedal. 

Chart: Yahoo Finance
Chart: Yahoo Finance

While the crypto lender said it was fewer than 100 coins, the firm’s exposure is believed to be around $10m, though that amount is decreasing as more users return the coins, said Zac Prince, co-founder and CEO of BlockFi.

One user reportedly received 700 bitcoin — worth £21m — rather than $700.

Ethereum (ETH-USD) — the world's second biggest cryptocurrency — was trading 0.3% lower on Friday to $2,702, and Elon Musk favourite, dogecoin (DOGE-USD) was up 5.4% to $0.40. 

Watch: Bitcoin may signal where S&P's heading -analyst

Read more: Dogecoin jumps as Elon Musk takes to Twitter again 

The crypto world lost 20% of its value on Wednesday as deep correction hit the market, sending investors scrambling. This saw bitcoin fall to below $32,000, while ethereum dropped as much as 30% during the session.

Cryptocurrencies have recently been boosted by institutional support. Several organisations, including MicroStrategy (MSTR) and Tesla (TSLA) have invested billions of dollars into cryptocurrencies. Traditional financial firms like PayPal (PYPL) and Goldman Sachs (GS) have also begun handling the asset on behalf of clients, leaving them with potential exposure.

However, the sell-off highlighted the extreme volatility that characterises crypto markets. Unlike with past corrections, experts said this week's slump had more consequences for the mainstream financial system and traditional firms.

The Iranian government also ramped up pressure, enlisting intelligence officers in a bid to crack down on illegal cryptocurrency miners as the country’s power grid struggles to handle rising electricity consumption.

Watch: What are the risks of investing in cryptocurrency?

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