Cryptocurrency continues to drain investors' capital, with the price of bitcoin plunging to its lowest level since October and rising again as concerns about tighter regulation from US authorities and other central banks drive traders out of the market after a rough start to 2018.
Since January, the sale has taken almost three billion worth of cryptocurrencies out of the market. This has rocked the nascent market, whose core features - anonymity and decentralization - are being challenged by regulators like never before.
Financial regulators have identified a failure to maintain order in the cryptocurrency market, opening the door for Congress to tighten its grip on what has become a global investment craze. “Regulators may need to pass legislation that gives agencies authority over the bitcoin spot market and online platforms that trade digital coins,” Commodity Futures Trading Commission Commissioner Christopher Giancarlo and SEC Commissioner Jay Clayton told Congress.
“If anything, they acknowledge that there are areas of regulatory weakness (not that such activity is illegal under existing law) regarding cryptocurrencies are a bit of a reprieve that could benefit the market,” Jesse Overall, a lawyer at Clifford Chance, wrote in an email.
Agustín Carstens, CEO of Bank of International Settlement, said authorities must rein in digital currencies and that central banks, along with ministries of finance, tax departments and financial market regulators, must maintain order in the digital environment.
“New technologies are not the same as better technology or better economics,” Carstens said during a speech in Frankfurt. “Bitcoin may have been intended as an alternative payment system without government involvement, but it has become a “combination of a bubble, a pyramid scheme and an environmental disaster” in its use of electricity.”
The most expensive virtual currency fell in price by as much as 17 percent to $5,922 before rising to $7,076 as of 1:04 a.m. New York time, according to a Bloomberg price comparison chart. Alternative cryptocurrencies Ripple, Ether and Litecoin also fell as much as 19 percent before losing steam.
Cryptocurrencies Tracked by Coinmarketcap..com have lost more than $500 billion in market value since early January as governments stepped up regulation, credit card issuers suspended purchases and investors grew increasingly concerned that digital assets' meteoric rise last year was unjustified. This week's selling coincided with a decline in share prices in the global financial market, and losses in Asian markets increased on Tuesday due to lower share prices.
Some technical indicators suggest that the price of Bitcoin will fall further. The MACD (moving average convergence divergence) indicator, the best-performing of 22 trading indicators tracked by Bloomberg over the past year, is also forecast lower.
Bitcoin also fell below its 200-day moving average on Tuesday for the first time in more than two years. The last time this happened, in August 2015, the cryptocurrency lost as much as 24 percent within two weeks.
“We may be going back to what the actual value of bitcoin should be,” says Craig Erlam.
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According to https://www.bloomberg.com
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