LONDON: Bitcoin fell as much as 20 percent on Wednesday, piercing below $10,000, while other cryptocurrencies took similar spills due to investor fears that regulators could clamp down on them to curb speculation.
The world’s biggest and best-known cryptocurrency at one point lost 30 percent of its value since Tuesday. Bitcoin, despite some stabilization in late U.S. trading, was half its record peak of almost $20,000 set on the Luxembourg-based Bitstamp exchange a month ago.
Ethereum and Ripple, the No. 2 and No. 3 virtual currencies, tumbled after reports South Korea and China could ban cryptocurrency trading, sparking worries of a wider regulatory crackdown.
Analysts at Citi said on Wednesday bitcoin could halve again in value amid the current rout, adding that a possible fall to a range between $5,605 and $5,673 “looks very likely to be very speedy”.
With South Korea, Japan and China all making noises about a regulatory swoop, and officials in France and the United States vowing to investigate cryptocurrencies, there are 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.
REVERSAL OF FORTUNES
The current rout in bitcoin and other digital currencies was a far cry from their dramatic run-up in 2017 when mainstream investors jumped on the bandwagon and as an explosion in so-called initial coin offerings (ICOs) – digital, token-based fundraising rounds – drove demand.
Bitcoin has plummeted before.
There have been nine instances including the current selloff going back to 2011 where bitcoin’s price was halved on the Bitstamp exchange. The last time was from November 2014 to January 2015.
On Wednesday, bitcoin fell as low as $9,222 on Bitstamp, its lowest price since Dec. 1, as CBOE and CME bitcoin futures tumbled to contract lows.
The latest market losses stemmed from reports that South Korea’s finance minister said banning trading in cryptocurrencies is still an option and that Seoul plans a set of measures to clamp down on the “irrational” cryptocurrency investment craze.
Separately, a senior Chinese central banker said authorities should ban centralized trading of virtual currencies as well as individuals and businesses that provide related services.
