Bitcoin falls 7 per cent on extended sell-off

This article is more than 12 months old

TOKYO/SINGAPORE: Bitcoin extended its sharp tumble, skidding more than 7 per cent yesterday in a rapid downturn in fortunes as investors were spooked by fears that regulators might clamp down on the asset whose value has skyrocketed in the past year.

The price of the world's biggest and best-known cryptocurrency fell to as low as US$10,567 (S$13,900) on the Luxembourg-based Bitstamp exchange, not far from its six-week nadir of US$10,162 touched the previous day. The session's high was $11,794.07.

Other cryptocurrencies such as Ethereum and Ripple have also slid sharply this week after reports South Korea and China could ban trading, sparking worries of a wider regulatory crackdown.

"Cryptocurrencies could be capped in the current quarter ahead of the G-20 meeting in March, where policymakers could discuss tighter regulations," said Alt Design chief analyst Shuhei Fujise.

At its lows on Tuesday, bitcoin had fallen 25 per cent in the session, its biggest daily decline in four months. It was a far cry from its peak of close to US$20,000 last month, when bitcoin had risen nearly 2,000 per cent over the year.

Tuesday's decline followed reports that South Korea's finance minister had said banning trading in cryptocurrencies was still an option.

Separately, a senior Chinese central banker said the authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services.

Mr Steven Englander, head of strategy at New York-based Rafiki Capital Management, said: "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is that cryptocurrency holders are trying to decide whether to abandon bitcoin because its limitations mean it will be superseded by better products or bet that it can thrive despite them."

Analyst Makoto Sakuma at Tokyo-based NLI Research Institute said trading volumes had been low despite the volatility.

He added: "But while the rally phase is over, I do not think it is right to say bitcoin is finished." - REUTERS