Around 6,000 Swiss VW owners seek damages in emissions scandal

ZURICH (Reuters) – Swiss consumer protection organization SKS has filed a claim on behalf of some 6,000 car owners seeking damages from Volkswagen AG (VOWG_p.DE) and Swiss car dealer AMAG related to the “Dieselgate” emissions scandal.

The claim has been lodged with the Zurich commercial court.

SKS said it was assuming damages amounted on average to 15 percent of the initial retail price of the vehicles concerned and that, together with insurance companies supporting the legal action, it wanted to give Swiss-based car owners the possibility to enforce their rights without disproportionate financial risk.

“The cars sold as environmentally friendly were overpriced from the beginning. Due to the manipulation of the exhaust system, they then lost even more of their value on the secondary market,” SKS (Stiftung fuer Konsumentenschutz) said in a statement on Friday.

Volkswagen said it would examine the details of the claim once it had them but said it saw no fundamental case as industry experts had not been able to establish any significant loss of value for VW diesel vehicles on the Swiss market.

“The trust and satisfaction of our customers are extremely important to us. However, we are of the opinion that there are no legal grounds for claims connected with the diesel issue,” it said in a statement.

Volkswagen said 98 percent of the 173,000 affected vehicles in Switzerland had already been refitted at no cost to owners.

AMAG, which imports the cars into Switzerland, said in a statement on its website it did not understand why SKS filed the claim because prices on the secondary market for VW diesel cars were at least on the same level or even higher than those of competing models.

It also said it had not acted with the intention of wilfully deceiving customers.

VW admitted in September 2015 to installing secret software in hundreds of thousands of U.S. diesel cars to cheat exhaust emissions tests and make them appear cleaner than they were on the road, and that as many as 11 million vehicles could have similar software installed worldwide.

Earlier this month, Germany’s highest court rejected a bid by Volkswagen to suspend the work of a special auditor appointed to investigate management actions in the emissions scandal.

Reporting by Silke Koltrowitz; Additional reporting by Georgina Prodhan; Editing by Alison Williams and Stephen Powell

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Wall Street eyes 2018 gains with a side of caution

(Reuters) – U.S. stocks are expected to keep rising in 2018 because a massive drop in the corporate tax rate is seen boosting the economy and corporate profits, but strategists say sizable gains could either be short-lived or elusive.

The bull market is on track to mark its ninth birthday in March, with the S&P 500 climbing 20 percent for 2017 – its biggest increase since 2013. The drop in the corporate tax rate in 2018, to 21 percent from 35 percent, is seen by many as the biggest factor for the stock market next year.

Yet 2018 share gains are expected to be smaller than 2017 with the S&P 500’s price/earnings ratio – a measure of stock prices against expected profits – is around its highest level since June 2002. Many on Wall Street cite potential pitfalls even though they see no signs of a recession.

“We’ve had six years in a row where stocks have (outperformed) earnings, and I think we break that streak with stocks going up but not as much as earnings,” said Robert Doll, chief equity strategist at Nuveen Asset Management in Princeton, New Jersey.

Some say the tax bill’s benefit will be short lived. David Kelly, chief global strategist at J.P. Morgan Asset Management described the bill as “more carbs and less protein,” because the tax overhaul will improve spending but does nothing to boost productivity.

“It’ll be a one-year wonder,” said Kelly. “People should enjoy the party while it lasts but just make sure you know where your coat is.”

Several strategists cite the risk that faster economic growth could cause inflation to increase at a pace that would lead the U.S. Federal Reserve to raise interest rates faster than expected.

Wall Street’s rosy forecasts seem “well supported by the tremendous string of good news which the economy has delivered,” according to Jim Paulsen, chief investment strategist with Leuthold Group in Minneapolis.

But he said, the news is too good: “The problem with getting good news is that at some point you can’t be positively surprised any more.”

Paulsen does not expect a recession. But when the economic surprise index – which compares economic data to consensus expectations – is at high levels, equity performance tends to be weaker, according to Paulsen.

The Citi Economic Surprise index .CESIUSD was at 77 on Thursday, not far from its almost six-year high of 84.5 reached on Dec. 22.

“We’re going to have a 10-15 percent correction at some time in 2018. I wouldn’t be surprised if we’re down for the year,” Paulsen said. “If we get a correction and people get scared I’ll probably be buying again.”

Investors will keep a close watch on the on U.S. mid-term elections in 2018 because a Republican loss of control of the Senate or the House of Representatives could stall the party’s agenda. In 10 of the last 17 U.S. mid-term election years, equity price moves for the full year followed January’s direction, according to Jeff Hirsch, editor of the Stock Trader’s Almanac.

Investor moods in January may depend on whether the U.S. Congress reaches an agreement to raise the country’s debt ceiling. Investors will also be hoping Congress can reach a 2018 budget pact by Jan. 19. These are just some of the worries traders are contending with.

But the market has history against it. The S&P 500 rises on average 1.3 percent in the so-called Santa Clause rally – the period between Dec. 22 and Jan. 3 – according to Hirsch. This year, five days in, the S&P has risen just 0.1 percent.

“The failure of stocks to rally during this time tends to precede bear markets or times when stocks could be purchased at lower prices later in the year,” Hirsch wrote in a blog post.

Reporting by Sinead Carew; Additional reporting by Caroline Valetkevitch and Rodrigo Campos; Editing by Leslie Adler

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Wall Street drifts lower on last trading day of 2017

(Reuters) – A slide in Apple and Goldman Sachs’ shares pulled Wall Street lower on the last trading day of 2017, in what has been a banner year for U.S. stocks.

Apple (AAPL.O) declined 0.8 percent after issuing a rare apology for slowing older iPhones with flagging batteries.

Goldman Sachs (GS.N) fell 1.27 percent after the bank said its fourth-quarter earnings would take a $5 billion hit related to the tax overhaul.

“By all accounts we know 2017 has been a great year in the markets,” said Arian Vojdani, investment strategist at MV Financial in Bethesda, Maryland.

“The market is rich (in valuation) as of now and if prices and earnings continue to converge, I wouldn’t be concerned.”

Major U.S. indexes hit a series of record highs in 2017, riding on strong economic growth, solid corporate earnings and low interest rates.

The benchmark S&P 500 has surged 20 percent this year, while the blue-chip Dow has gained more than 25 percent and the tech-heavy Nasdaq about 29 percent. All three indexes are on track for their best performances since 2013.

The market has also shown surprising strength despite tensions in North Korea and political upheavals in Washington. The S&P has closed below 1 percent only four times this year.

Among sectors, the technology index .SPLRCT has been the best performer, rising about 37 percent and outpacing gains in the broader S&P index.

Telecom services .SPLRCL and energy .SPNY are the only two sectors to end the year in the red.

The rally is widely expected to extend into 2018, boosted by gains from a new law that lowers the tax burden on U.S. corporations.

At 10:58 a.m. ET (1558 GMT), the Dow Jones Industrial Average .DJI was down 34.31 points, or 0.14 percent, at 24,803.2 and the S&P 500 .SPX was down 2.85 points, or 0.11 percent, at 2,684.69.

The Nasdaq Composite .IXIC was down 18.17 points, or 0.26 percent, at 6,931.99.

Seven of the 11 major S&P sectors were higher on Friday, led by 0.35 percent gain in the consumer staples index .SPLRCS.

Altria (MO.N), Coca-Cola (KO.N) and Philip Morris (PM.N), gained between 0.7 percent and 1 percent in thin holiday trading ahead of the New Year.

Amazon (AMZN.O) slipped 0.6 percent after President Donald Trump targeted the online retailer in a call for the country’s postal service to raise prices of shipments in order to recoup costs.

Declining issues outnumbered advancers on the NYSE by 1,384 to 1,323. On the Nasdaq, 1,453 issues fell and 1,307 advanced.

Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva

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Wall Street lifted by gains in technology shares

(Reuters) – Wall Street’s main indexes were slightly higher in late morning trading on Thursday, helped by gains in technology stocks.

A mere 0.4 percent rise in Apple APPL.O led the three indexes higher, an indication of the muted trading activity in the week ahead of the New Year holiday.

Commodities were in the spotlight, with oil prices near their two-and-a-half-year highs and copper CMCU3 at four-year peak, helping global equities hit record levels.

The benchmark S&P 500 has climbed about 20 percent this year, on track to record its best annual gains since 2013, boosted by robust economic growth and solid corporate earnings.

The rally is widely expected to extend into 2018 fueled by gains from a new U.S. tax law that lowers tax burden on corporates.

“Tax cuts will produce an increase in earnings and that is now incorporated into official sell-side estimates,” said Brant Houston, managing director at CIBC Atlantic Trust Private Wealth Management in Colarado.

“However, I don’t think we should get used to returns like this, the trends looking forward will be more subdued than we saw in 2017.”

Traders work on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., December 28, 2017. REUTERS/Andrew Kelly

The dollar slipped to a four-week low against a basket of currencies, under pressure from a recent dip in U.S. 10-year bond yields. [USD/] A weaker dollar tends to boost revenue of companies with large global presence.

At 10:57 a.m. ET (1557 GMT), the Dow Jones Industrial Average .DJI was up 53.18 points, or 0.21 percent, at 24,827.48.

The S&P 500 .SPX was up 2.2 points, or 0.08 percent, at 2,684.82 and the Nasdaq Composite .IXIC was up 3.57 points, or 0.05 percent, at 6,942.90.

Seven of the 11 major S&P sectors were higher, with the technology index’s .SPLRCT 0.31 percent rise topping the list.

The high-flying FANG stocks – Facebook, Amazon, Netflix and Alphabet – also contributed to the rise.

Live Ventures (LIVE.O), owner of internet marketing firm LiveDeal, surged more than 70 percent after reporting a jump in annual revenue.

J.B. Hunt Transport (JBHT.O) fell about 2 percent after the logistic services provider forecast current-quarter profit below estimates.

Advancing issues outnumbered decliners on the NYSE by 1,551 to 1,164. On the Nasdaq, 1,395 issues rose and 1,352 fell.

Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva

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No Trump windfall for private prisons yet, but some bet on gains

(Reuters) – Investors who bet on private prison operators as big winners from Donald Trump’s tough line on crime and illegal immigration are looking back at a bruising year of high hopes and disappointment. Some, however, say the stocks still offer good value even though an anticipated windfall under the Trump administration so far has failed to materialize.

They say the two listed operators – Geo Group Inc (GEO.N) and CoreCivic Inc (CXW.N) – stand to win contracts from states struggling with prison overcrowding, such as Kansas and Oklahoma, and have plenty of room to accommodate new demand.

Valuable properties owned by the two companies, which operate as prison real estate investment trusts (REITs), and long-term federal contracts with minimum revenue guarantees also make them attractive, they say.

The administration’s proposals to bolster the U.S. Immigration and Customs Enforcement (ICE) agency could help in the future though it is still unclear how much new money it will bring.

“People are focusing on ICE and ignoring the state level opportunities,” said Jordan Hymowitz managing partner Philadelphia Financial Management in San Francisco.

Geo and CoreCivic shares soared after Trump won the White House, partly on expectations that detention centers they run for ICE would fill up thanks to an anticipated surge in arrests along the Mexican border.

Yet the opposite happened – arrests declined for months after Trump’s inauguration because fewer people attempted to cross the border and shares in CoreCivic and Geo reversed course after peaking in February and April respectively. (Graphic: tmsnrt.rs/2BUZlfe)

While detentions have been rising from month to month since hitting a year-low in May, the stocks have not yet recovered. CoreCivic now trades 37 percent below its post election high, while Geo is about 32 percent below its 2017 peak.

Investors say lack of clarity on how much business they will get from ICE, the companies’ biggest client, is holding the shares back.

“People can’t figure out if immigration reform is good or bad for private contractors,” said Eric Marshall, portfolio manager and head of research at Hodges Capital Management in Dallas, Texas. Hodges sold its CoreCivic shares after the post-election rally but still owns Geo.

CoreCivic and Geo declined comment on their performance and outlook beyond their comments in earnings calls and statements.

MAIN CUSTOMER

The immigration enforcement agency, which cites its average cost per bed at $129 per day, accounted for about a quarter of CoreCivic’s and Geo’s revenue in the first nine months of 2017.

Federal, state and local prisons make up most of the remaining revenue.

ICE asked Congress for a $1.2 billion funding increase, but the latest budget proposal offered $700 million, according to Geo, and its 2018 funding remains unclear.

GEO and CoreCivic make up two-thirds of the roughly $5.3 billion per year U.S. private prison business, according to market research firm IBISWorld.

However, potential state contracts promise to boost prison companies’ earnings and make them less controversial.

Both the sheer size of the U.S. prison population, by far the world’s largest, and the use of privately-run prisons have been a subject of political debate. (Graphic: tmsnrt.rs/2BFI8Sz)

As a result, Barack Obama’s administration laid out plans, abandoned under Trump, to phase out outsourcing, citing, among others, safety concerns.

Investors said a pending Kansas Department of Corrections proposal for CoreCivic to build a new prison which the state would manage, would address some investor concerns by making the company a landlord rather than a prison operator. If copied by other states, such approach would open new opportunities for the companies, which mostly derive revenue from running their own prisons or government facilities.

“There’s a lot of noise around being a private prison operator” said Jamie Cuellar, co-portfolio manager of the Buffalo Small Cap Fund based in Mission, Kansas.

“If people start thinking of them more like a government agency REIT than a prison operator it could be helpful to the valuation,” he said.

Cuellar noted that Easterly Government Properties (DEA.N), a REIT which leases office buildings to government agencies, trades at a multiple of 15.8 times earnings estimates. In comparison, CoreCivic’s forward multiple is 10.0 and Geo’s is 11.8, according to the latest data.

Thousands of vacancies at CoreCivic and Geo facilities should also be viewed as a positive, because they could lift earnings with little extra investment, investors say.

Hymowitz estimated that CoreCivic, which has around 15,000 empty beds, could boost by a fifth its funds from operations (FFO) per share if it could fill just a quarter of them. CoreCivic said in November it could add $1 to annual earnings per share (FFO) if it can open its eight idle prisons and boost inmate numbers in partially vacant facilities.

Geo said in October that filling 7,000 empty beds could add $50-$60 million to its annual earnings before interest, tax, depreciation and amortization (EBITDA), a roughly 11-13 percent increase to 2018 analyst estimates.

Buffalo Funds’ Cuellar has a $45 long term price target for CoreCivic, which last traded around $22. While it would take new business to get there, Cuellar says he can afford to be patient given its steady dividend payouts.

”I don’t believe there is a lot of downside from here. Meanwhile, I get paid a 7.6 percent dividend to wait.”

(GRAPHIC: reut.rs/2BzSzex)

(GRAPHIC: tmsnrt.rs/2y7wgeh)

Additional reporting by Noel Randewich and Megan Davies; Editing by Tomasz Janowski

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Bitcoin holds overnight gains after last week’s rout

NEW YORK (Reuters) – Bitcoin held its overnight gains in early U.S. trading on Tuesday as the world’s biggest and best-known cryptocurrency rebounded on light trading volume from its worst week since 2013.

At 8:33 a.m. (1333 GMT), the digital currency was last up almost 10 percent at $15,300.00 on the Luxembourg-based Bitstamp exchange BTC=BTSP. It lost nearly 30 percent at one point last Friday at $11,159.93.

Reporting by Richard Leong in New York, Lisa Twaronite in Tokyo and Vidya Ranganathan in SingaporeEditing by Chizu Nomiyama

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Exclusive: ArcelorMittal tells Ilva it wants to change buying contract

ROME (Reuters) – Steelmaker ArcelorMittal has told commissioners running Italy’s Ilva plant that it wants changes made to the contract in which it agreed to buy the company in order to protect it from legal challenges in Italy.

ArcelorMittal, the world’s top steelmaker, reached a 1.8-billion-euro ($2.1 billion) deal to buy Ilva in June but the purchase has since stalled due to legal challenges and an EU anti-trust investigation.

In the latest twist, the commissioners in charge of Ilva have written to Italy’s industry ministry saying ArcelorMittal has told them it now wants the purchase contract changed to safeguard it in case the legal challenges are successful.

ArcelorMittal has asked for “modifications and additions” allowing for the deal to be suspended or dissolved if a court in southern Italy upholds the challenges, according to the commissioners’ letter, dated Dec. 21, which Reuters has seen.

“We are assessing, with our consultants, whether these requests are compatible with the rules in force,” the letter says, adding that in any case the commissioners will take no steps without first informing the government.

ArcelorMittal declined to comment to Reuters.

EU antitrust authorities in November upgraded their own investigation into the company’s proposed takeover of Ilva, fearing it will lead to steel price hikes. European steel prices are up some 85 percent since Jan. 1, 2016.

A few weeks after the anti-trust filing, the Puglia and Taranto local authorities filed an appeal against the Italian government’s approval of ArcelorMittal’s environmental plan for Ilva. They said the plan did not do enough to safeguard the environment and public health.

Prime Minister Paolo Gentiloni wrote to the governor of Puglia and mayor of Taranto on Friday, urging them to drop the lawsuits.

Similar appeals had previously been made by Industry Minister Carlo Calendar, warning the challenges could scupper the deal with ArcelorMittal. Puglia’s governor Michele Emilio has so far refused to budge.

Ilva, based in the city of Taranto in Italy’s southern heel, is Europe’s largest steel plant. It has been dogged by charges of corruption and environmental crime for years.

In 2012, Italian authorities ruled emissions from the plant had caused deaths, tumors and respiratory diseases. About half the plant’s annual 11 million-tonne capacity was eventually mothballed.

Editing by Andrew Roche

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This year’s lumps of coal could be 2018’s diamonds

SAN FRANCISCO (Reuters) – Investors saddled in 2017 with the market’s worst performers, including Under Armour and General Electric, may do well to remember as December draws to an end that lumps of coal sometimes turn into diamonds.

As investment advisors rebalance clients’ portfolios in the final weeks of the year, the instinct to dump stocks that have been left behind in surging markets – or that fall out of favor with analysts – can be self-destructive.

With the S&P 500’s rally pushing price/earnings multiples to highs not seen since 2002, laggards overlooked by a rush to own technology and other high-growth stocks may attract bargain-hunting investors heading into 2017.

“A contrarian strategy of buying beaten-up names might have a good year,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Ghriskey in recent months bought shares of General Electric (GE.N), which has slumped 45 percent this year as it struggles with a shift from coal and gas to renewable energy. He believes the 125-year-old conglomerate will claw its way back to growth, or might be split into multiple companies.

Some of the worst-performing stocks of 2016 roared back to life in 2017, including Vertex Pharmaceuticals (VRTX.O) and medical device maker Illumina (ILMN.O). Those two companies this year have rebounded 69 percent or more.

As he rebalances clients’ portfolios this month, Jake Dollarhide, head of Longbow Asset Management in Tulsa, Oklahoma, is investing more in Kroger Co (KR.N) and other supermarkets that took a beating after Amazon.com (AMZN.O) said in June it was buying Whole Food Markets.

Kroger has lost 20 percent year to date and it recently traded at 14 times expected earnings, compared to its five-year average of 27.

“Grocery is local; it’s not an internet play. And Kroger has the footprint to not even notice that Amazon is around,” Dollarhide said.

Investors following the Dogs of the Dow investment strategy each year buy components of the Dow Jones Industrial Average with the highest dividend yield, betting that those stocks have been oversold. Currently, those companies include Verizon Communications (VZ.N), International Business Machines (IBM.N) and Exxon Mobil (XOM.N), all with dividend yields of 3.7 percent or more.

Those three stocks were also Dogs of the Dow at the start of this year, and they have underperformed. But an investor following that strategy last December also would have bought Boeing (BA.N), which has nearly doubled in 2017, Caterpillar (CAT.N), which is up 64 percent, and Cisco Systems (CSCO.O), which has risen 28 percent.

Nike (NKE.N) in 2016 suffered a 19-percent drop, making it the worst-performing Dow component. In the past 12 months, however, it has surged back with a 25 percent rally.

Due partly to increased competition from Nike, Under Armour (UAA.N) has slumped 48 percent year to date, making it the S&P 500’s third-worst-performing stock. Last January, most analysts recommended buying Under Armour’s shares and none recommended selling. Now, most analysts are neutral on the yoga-pant pioneer.

Underscoring the fallibility of analysts, four of the 10 S&P 500 worst-rated stocks at the end of last year are on track to finish 2017 with annual increases above the index’s 20-perent gain.

Among them, domain name registration provider VeriSign (VRSN.O) has surged 53 percent, while Emerson Electric (EMR.N) has rallied 24 percent, with much of that gain in the past month after the industrial-automation systems maker abandoned its bid for Rockwell Automation Inc (ROK.N).

2017’s diamonds and lumps of coal: tmsnrt.rs/2BhvwkC

Reporting by Noel Randewich; Editing by James Dalgleish

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Amgen estimates its U.S. tax bill at over $6 billion as it repatriates cash

NEW YORK (Reuters) – Amgen Inc (AMGN.O) said it expects to incur tax expenses of $6 billion to $6.5 billion over time as it repatriates cash it has accumulated around the world because of the new U.S. tax law signed by President Donald Trump on Friday.

Some of the expense is also due to the revaluation of its tax liabilities, the drugmaker said in a filing with the Securities and Exchange Commission.

Amgen did not say how much of its $38.9 billion in cash and other holdings it plans to move back to the United States. To encourage U.S. companies to bring home the more than $2.6 trillion now held overseas, the law sets a one-time tax repatriation rate of 15.5 percent for cash and cash-equivalents and 8 percent for illiquid assets.

Amgen said its future U.S. income generally will be taxed at the 21 percent U.S. corporate income tax rate, while its income elsewhere will generally be taxed in the United States at 10.5 percent, reduced by foreign tax credits.

It said the tax expenses from moving its cash back to the United States will affect its current generally accepted accounting principles (GAAP) earnings forecast, but will not affect its non-GAAP forecast.

Reporting by Michael Erman; Editing by Lisa Shumaker

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Bitcoin plunges below $13,000, heads for worst week since 2013

LONDON/TOKYO (Reuters) – Bitcoin plunged below $13,000 (£10,970) on Friday after losing around a third of its value in just five days, with the digital currency on track for its worst week since 2013 after a blistering ascent to a peak close to $20,000 on Sunday.

The biggest and best-known cryptocurrency had seen a staggering twentyfold increase since the start of the year, climbing from less than $1,000 to as high as $19,666 on the Luxembourg-based Bitstamp exchange BTC=BTSP on Sunday and to over $20,000 on other exchanges.

But bitcoin has fallen each day since then, with losses accelerating on Friday. It fell to as low as $12,560 on Bitstamp, marking a fall of almost 20 percent on the day. At 0850 GMT it was trading down 15 percent on the day at $13,320 and was heading for its worst day in more than three months.

For the week, it was down around a third – its worst performance since April 2013.

“A manic upward swing led by the herd will be followed by a downturn as the emotional sentiment changes,” said Charles Hayter, founder and chief executive of industry website Cryptocompare in London.

“A lot of traders have been waiting for this large correction.”

“With the end of the year in sight a lot of investors will be taking profits and saying thank you very much and closing their books for the holiday period,” he added.

Bitcoin has had a difficult week. As warnings about the risks of investing in the volatile and unregulated market have continued to sound louder – with Denmark’s central bank governor calling it a “deadly” gamble – there have been more worries over the exchanges on which cryptocurrencies are bought and sold.

South Korean cryptocurrency exchange Youbit said on Tuesday it is shutting down and is filing for bankruptcy after it was hacked for the second time this year.

Coinbase, a U.S. company that runs one of the biggest exchanges and provides digital “wallets” for storing bitcoins, said on Wednesday it would investigate accusations of insider trading, following a sharp increase in the price of a bitcoin spin-off hours before it announced support for it.

CRYPTO-RIVALS

As rival cryptocurrencies slid along with bitcoin, the total estimated value of the crypto market fell to as low as $480 billion, according to industry website Coinmarketcap, having neared $650 billion just a day earlier.

But other cryptocurrencies had surged earlier in the week, with many market-watchers saying investors who felt bitcoin’s price had become stretched were moving into other digital coins, rather than cashing out entirely.

Ethereum, the second-biggest cryptocurrency by market size, soared to almost $900 earlier in the week, up from around $500 just a week earlier. Ripple, the third-biggest, has more than quadrupled in price since Monday.

“A lot of the capital is flowing from bitcoin into alternative coins,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers in Sydney.

Stephen Innes, head of trading in Asia-Pacific for retail FX broker Oanda in Singapore, said that there have also been moves out of bitcoin into Bitcoin Cash, a clone of the original cryptocurrency. Oanda does not handle trading in bitcoin.

“Most of it is unsophisticated retail traders getting burned badly,” Innes said on bitcoin’s recent retreat.

While some say the launch by CME and its rival Cboe Global Markets of bitcoin futures over the last two weeks has given the digital currency some perceived legitimacy, many policymakers remain sceptical.

Bitcoin is known to go through wild swings. In November, it tumbled almost 30 percent in four days from $7,888 to $5,555. In September, it fell 40 percent from $4,979 to $2,972.

“Trading in bitcoin is akin to gambling, so its movements don’t follow logical patterns,” said Takashi Hiroki, chief strategist at Monex Securities in Tokyo.

“Unlike equities and bonds, it is not possible to calculate expected returns on bitcoin, so buying it becomes a gamble rather than an investment.”

For a graphic on Bitcoin moves this year, click – reut.rs/2BVVXQd

Reporting by Shinichi Saoshiro; Additional reporting by Masayuki Kitano in Singapore; Editing by Sam Holmes and Keith Weir

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