Bitcoin falls 20% as fears of cryptocurrency crackdown linger
Cryptocurrency selloff got fresh impetus on Tuesday when bitcoin slumped, plunging as much as 20% as the prospect of regulatory crackdowns appeared to spread
Hong Kong/Madrid: January’s cryptocurrency selloff got fresh impetus on Tuesday when bitcoin slumped, plunging as much as 20% as the prospect of regulatory crackdowns appeared to spread.
The largest digital coin fell 14% to $11,940 as of 11:40am in London, the lowest level since late December, according to composite pricing on Bloomberg. As bitcoin halted a two-day rally, rival cryptocurrencies also plunged. Ripple sank as much as 33% and ethereum dropped 24%, before paring some of those declines.
Speculators across the globe are struggling to determine when or how market watchdogs may rein in an industry that’s decentralized and derives much of its value from anonymous ownership. Many assertions that digital coins represent a bubble have triggered double-digit selloffs over the past year, often to be followed by rebounds.
In South Korea, shutting down cryptocurrency exchanges is still an option, finance minister Kim Dong-yeon said in an interview with TBS radio. But measures first need “serious” discussion among ministries, Kim added, holding out hope for traders that a crackdown won’t go that far. Kim said there’s irrational speculation and that rational regulation was needed.
“The finance minister made it clear they’re definitely considering banning crypto trading — and it’s probably the third-largest market,” said Neil Wilson, senior market analyst in London for online trading platform ETX Capital. “The news is hitting prices and broader sentiment, and it follows China’s move to shutter mines.”
China, which first began targeting the industry last year, is escalating its clampdown on cryptocurrency trading, particularly online platforms and mobile apps that offer exchange-like services, according to people familiar with the matter.
“We’ve heard reports that South Korea, China and Japan have considered a shared approach, a path, to regulation,” ETX’s Wilson said, also citing a challenge to digital coins from a bill in the US Senate. “It looks like the light touch that has allowed the crypto-boom to explode may be coming to an end,” he wrote in a note to investors.
Steven Maijoor, chairman of the European Securities and Markets Authority, said investors “should be prepared to lose all their money” in bitcoin, in a Bloomberg TV interview in Hong Kong. “It has an extremely volatile value, which undermines its use as a currency,” he said. “It’s also not broadly accepted.”
The ESMA warned retail investors against initial coin offerings in November and is monitoring developments in cryptocurrencies, Maijoor said. Bloomberg
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