Bitcoin skidded below $10,0000 on Wednesday – halving in value from its peak. Investors are gripped by fear and regulators could clamp down the unpredictable cryptocurrency that sky-rocketed last year.
The world’s most popular cryptocurrency, bitcoin, fell to as low as $9,500 on the Luxembourg-based Bitstamp exchange; making this slump the lowest since 1 December.
Bitcoin had reached a peak of almost $20,000 in December – and indeed crossed over that threshold on some exchanges. However, it has since been agitated by several large selloffs.
Ethereum and Ripple also plunged both down heavily after South Korea and China could ban cryptocurrency trading. This sparked major panic for investors with a wider regulatory crackdown.
“There is a lot of panic in the market. People are selling to try and get the hell out of there,” said Charles Hayter, founder of Cryptocompare, which owns cryptocurrencies.
“You have more regulatory uncertainty ... and because of these falls, you have these other fallouts,” he said, referring to the collapse of some cryptocurrencies in the recent slump in prices.
Top analysts at Citi Bank predict that bitcoin could halve again amid the current collapse, adding that a possible fall to between $5,605 and $5,673 area “looks very likely to be very speedy”
South Korea, Japan and China are all attempting to regulate the currency, and officials in France and the United States are promising to investigate cryptocurrencies. Due to this, there are heightened concerns that global coordination on how to regulate them will accelerate.
Officials are expected to debate the rise of bitcoin at the upcoming G20 summit in Argentina in March.
“Cryptocurrencies could be capped in the current quarter ahead of the G20 meeting in March, where policymakers could discuss tighter regulations,” said Shuhei Fujise, chief analyst at Alt Design.
On Tuesday, bitcoin suffered its biggest daily decline in four months. It was from its peak which was close to $20,000 in December when the virtual currency rose by nearly 2,000% over the year.
Marc Singer, an adviser at Singer Xenos in Miami remarks that bitcoin has plummeted before. Bitcoin fells 93% in value over a five-month period in 2011. The last time bitcoin more than halved in value was from November 2014 to January 2015.
Tuesday’s decline followed reports that South Korea’s finance minister had said that banning cryptocurrencies is still an option and that Seoul plans a set of measures to clamp down on the “irrational” cryptocurrency investment craze.
In a totally different event, Chinese central banker said authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services.
“Bitcoin is deciding whether this is the moment to crash and burn,” said Steven Englander, head of strategy at New York-based Rafiki Capital.
“My conjecture is that cryptocurrency holders are trying to decide whether to abandon bitcoin because its limitations mean it will be superseded by better products or bet that it can thrive despite them.”
Cryptocurrencies had a bumpy year in 2017 as mainstream investors entered the market and as an explosion in so-called initial coin offerings – digital, token-based fundraising rounds – drove demand.
Many observers say the recent falls show that the bubble has burst, those backing promising markets sat that regulation is welcomed and wild price swings are on the horizon for the future.
“The volatility of bitcoin - and other cryptocurrencies - is an expected, and important, part of the journey to becoming a mature asset class. We expect the volatility to continue throughout 2018 but fundamentally believe that bitcoin is still in a bull market,” said Christopher Keshian, co-founder of $APEX Token Fund.
According to website, CoinMarketCap, ethereum, the second largest cryptocurrency by market value, was down by 27% since Tuesday
Ripple, the third biggest, has lost 32% of its value over the past 24 hours and was quoted at $0,94, down from a high of $3,81 on 4 January.
“The run-up in bitcoin created a mystique of one-way trading which is being shaken, but the pricing requires faith that there will always be demand,” Englander wrote.
Bitcoin futures maturing on Wednesday on the CBOE Global Markets Inc’s CBOE Futures Exchange were at $9,580, with 3,996 contracts traded, after having opened at $10,850.