Bitcoin Fall Extends to 25% as Fears of Crypto Crackdown Linger

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January’s cryptocurrency selloff got fresh impetus on Tuesday when Bitcoin slumped as much as 25 percent, as the prospect of regulatory crackdowns appeared to spread.

While the largest digital coin was down 25 percent at $10,338 as of 4:37 p.m. in New York, it was still at the lowest level since early December, according to composite pricing on Bloomberg. As Bitcoin halted its two-day rally, rival cryptocurrencies also tumbled. Ripple sank as much as 40 percent and Ethereum dropped 26 percent.

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, only 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

“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.

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How China’s Stifling Bitcoin and Cryptocurrencies: QuickTake Q&A

“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 U.S 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.

Lower-than-normal trading in Korea and Japan may have exaggerated the moves in Asia hours on Tuesday, said Mati Greenspan, senior market analyst for the eToro currency platform.

Bitcoin trading using the Korean won was about 3.3 percent of the total among major currencies, compared with more than 10 percent reached on several days over the past two weeks, according to data.

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.”

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The ESMA warned retail investors against initial coin offerings in November and is monitoring developments in cryptocurrencies, Maijoor said.

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    Bitcoin Finds Floor After Worst Selloff Since 2015

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    Bitcoin rebounded on Saturday along with most of the major cryptocurrencies, halting a four-day tumble that drew worldwide attention to the unregulated $500 billion market that’s frequently called a bubble.

    The double-digit bounceback was strongest with second-tier digital coins. Bitcoin cash soared 21 percent and litecoin gained 12 percent as cryptocurrency traders regained optimism. They weren’t put off by comments published Saturday from a central banker in Germany that “the risk of rapid losses” is obscured in cryptocurrencies.

    “The enthusiasm hasn’t been destroyed,” Marc Ostwald, global strategist at London-based ADM Investor Services International, said by phone from Warsaw. “It’s a volatile market, and investors are hungry for that. They say everything else is boring.”

    The broad recovery on Saturday coincided with a pause in bearish news that had snowballed since Monday and shaved 24 percent off bitcoin’s value, its biggest four-day selloff since 2015. Comments by central bankers, a decision by litecoin’s founder to sell all his holdings and investors’ wishes to cut stakes before the holiday season fueled the plunge.

    “With holidays approaching, some people want to step away from the table, and take their chips with them,” Ostwald said about the selloff. “Still, I wouldn’t want to put it down too much to rationality, because this is not a rational market.”

    While bitcoin wasn’t the most volatile crypocurrency in the past week, it’s the largest, and it shook the world of digital-coin trading on Friday when its interday plunge reached 30 percent. That was the steepest dive since Jan. 14, 2015, back when its market value was just $2.4 billion. On Saturday it was about $260 billion.

    Bitcoin advanced 10 percent to $15,530 at 4:21 p.m. New York time on Saturday, compared with 24 hours earlier, according to data on

    In a late-week comment that undercut confidence, Michael Novogratz, the former Goldman Sachs Group Inc. and Fortress Investment Group LLC macro trader, said he’s shelving plans to start a cryptocurrency hedge fund. He predicted that bitcoin may extend its plunge to $8,000. Earlier this month he predicted it could reach $40,000 within a few months.

    For a look at whether Goldman is building a cryptocurrency trading desk, click here.

    Growing pains in the digital-coin world and warnings emerged all week, adding to volatility.

    Coinbase, one of the larger trading platforms, on Friday said all buys and sells were temporarily unavailable before they were re-enabled, according to its website. There were no incidents reported Saturday.

    In South Korea, Yapian, the owner of bitcoin exchange Youbit, said Tuesday it would close and enter bankruptcy proceedings after a cyberattack that claimed 17 percent of its total assets.

    ‘Bitter Losers’

    There’s been a string of warnings by regulators for investors in digital coins.

    “We are seeing a rapid rise in value, which hides the risk of rapid losses,” Bundesbank board member Carl-Ludwig Thiele said in a Euro am Sonntag report. He said there is a wide debate going on about the use of digital central-bank money in a closed system, but that he doesn’t currently expect it’s introduction.

    Felix Hufeld, president of German banking supervisor BaFin, advised consumers that trading in bitcoin would produce “bitter losers” and could result in a “total loss,” in an interview with German newspaper Bild.

    EU Warning

    That echoed comments three days ago by the European Union’s financial-services chief, Commissioner Valdis Dombrovskis, who asked the heads of the EU’s three financial supervisors to update their warnings to consumers “as a matter of urgency” in light of recent market developments, according to a letter seen by Bloomberg.

    In past years, central banks and the commercial lenders they oversee have made strides to curb money-laundering through greater transparency rules, only to see anonymous transactions explode in the nascent cryptocurrency industry — under names like Verge and Zcash. Their admonishments this month haven’t stopped double-digit rebounds.

    “Huge rises and sudden, spectacular setbacks wouldn’t surprise me going forward,” ADM’s Ostwald said. “The worry is going to be, at some point, the pips are going to start squeaking. Retail investors losing money will ask, ‘Why aren’t you intervening to help me? And the answer is going to be, ‘Well, this is a casino. On your head, be it.’ ”

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      Bitcoin falls $1,000 after South Korea promises crackdown on trading

      Move comes less than two weeks after high-profile digital currency exchange in Seoul was hacked and went bankrupt

      Bitcoin plunged by more than $1,000 (740) on Thursday after South Korea said it was planning a crackdown on trading in the digital currency in the latest of a string of warnings for investors.

      It dropped to about $13,500 after trading at about $15,400 on Wednesday. The dip was seen as a further illustration of bitcoins volatility.

      The cryptocurrency has surged in value this year by more than 900%, becoming one of the biggest stories in finance amid a slew of warnings of a pending market crash.

      Bitcoin recovered ground later on Thursday and was trading at about $14,000 at 5.30pm UK time.

      South Korea, which is one of the biggest markets in the world for bitcoin, said it was preparing a ban on opening anonymous cryptocurrency accounts and new legislation to enable regulators to close coin exchanges if they felt there was a need to do so.


      What is bitcoin and is it a bad investment?

      Bitcoin is the first, and the biggest, “cryptocurrency” a decentralised tradable digital asset. Whether it is a bad investment is the big question. Bitcoin can only be used as a medium of exchange and in practice has been far more important for the dark economy than it has for most legitimate uses. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption or regulation. That means it has attracted a range of backers, from libertarian monetarists who enjoy the idea of a currency with no inflation and no central bank, to drug dealers who like the fact that it is hard (but not impossible) to trace a bitcoin transaction back to a physical person.

      According to Reuters, the South Korean government issued a statement saying it had warned several times that virtual coins cannot play a role as actual currency and could result in high losses due to excessive volatility.

      The move came less than two weeks after the high-profile insolvency of one of the countrys digital currency exchanges, after the Seoul-based platform was hit by hackers for a second time.

      The exchange, called Youbit, shut down after losing 17% of its assets in a cyber-attack which was later blamed on North Korean hackers. The incident followed several other attacks against cryptocurrency platforms, such as a hack earlier in the month against the cryptomining marketplace NiceHash, which lost about 4,700 bitcoins in the attack.

      The crackdown in South Korea comes amid repeat warnings from leading figures in finance and some of the worlds top economists, who have said the currency is a vehicle for fraudsters and drug dealers. There are also fears that its rapid increase in value this year could quickly unwind, causing severe losses for investors.

      Sir Howard Davies, who chairs RBS, has likened investing in bitcoin to Dantes Inferno Abandon hope all ye who enter here while Jamie Dimon, the head of JP Morgan, has said bitcoin could potentially be worse than the tulip mania of the 17th century, when bulb prices rose vertiginously before crashing.

      However, several leading academics have said bitcoin poses no threat to the stability of the financial system, as its total value stands at about $240bn, paling in comparison with the total value of global shares at almost $80tn.

      Companies are also exploring ways to exploit blockchain which is the technology underpinning bitcoin and works by securely encrypting information to speed up everything in business from making payments to transferring data and contracts.

      Bitcoin rose to nearly $20,000 a week before Christmas, following the introduction of derivatives trading for major investment firms on the Chicago Mercantile Exchange, which enabled hedge funds to place bets on future prices. However, it then lost 25% of its value on 22 December, before recovering earlier this week and then slumping again on Thursday.

      While some have said more investors in the market could help support higher valuations, the currency is on a jittery run.

      Craig Erlam, senior market analyst at trading firm Oanda, said the recent fall in value could have made speculators more wary of the potentially negative news from Korea for its market price.

      We saw plenty of this in reverse on the way up, with positive news triggering significant rises and negative news being brushed aside. It wouldnt surprise me if we see prices heading back below $10,000 before they find their feet again, he said.

      Digital currencies have grabbed the attention of global regulators this year as a consequence of bitcoins rapid price growth, gaining in value from about $1,000 at the beginning of 2017. Other cryptocurrencies such as Ethereum, Ripple and Litecoin have also gained in value this year.

      Closer control of digital currencies by financial watchdogs could result in further volatility for bitcoin, as part of its attraction among supporters has been the lack of government and central bank oversight.

      The UKs Financial Conduct Authority has issued a warning about investing in initial coin offerings, which use digital tokens to raise funds for startup businesses and projects.

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