16 September 2019
Bitcoin could retreat further and slip below the US$6,000 mark, according to Citi analysts. Photo: Reuters
Bitcoin could retreat further and slip below the US$6,000 mark, according to Citi analysts. Photo: Reuters

Bitcoin falls below US$10,000 as selloff continues

Bitcoin fell below the US$10,000 level on Wednesday as a selloff continued in cyrptocurrencies amid fears of a regulatory clampdown on the units in various countries including South Korea and China.

The world’s biggest virtual currency plunged as much as 20 percent during the day, while other crypto units such as Ethereum and Ripple also took big hits.

“There is a lot of panic in the market. People are selling to try and get the hell out of there,” Charles Hayter, founder of Cryptocompare, which owns cryptocurrencies, told Reuters.

“You have more regulatory uncertainty … and because of these falls, you have these other fallouts,” he said, referring to the collapse of some cryptocurrencies.

Bitcoin at one point lost 30 percent of its value since Tuesday, and was half its record peak of almost US$20,000 set on the Luxembourg-based Bitstamp exchange a month ago.

Citigroup analysts wrote in a research note Wednesday that bitcoin could halve again in value from current levels.

The unit could fall into a range of US$5,605 to US$5,673 due to technical factors, and the slide “looks very likely to be very speedy”, the Citi analysts wrote, according to Reuters.

With South Korea, Japan and China all making noises about a regulatory crackdown, and officials in France and the US vowing to investigate cryptocurrencies, there are fears that authorities may launch some coordinated action in relation to the units.

Officials are expected to debate the rise of bitcoin at the upcoming G20 summit in Argentina in March.

“Cryptocurrencies could be capped in the current quarter ahead of the G20 meeting in March, where policymakers could discuss tighter regulations,” Reuters quoted Shuhei Fujise, chief analyst at Alt Design, as saying.

“Bitcoin is deciding whether this is the moment to crash and burn,” said Steven Englander, head of strategy at New York-based Rafiki Capital.

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, Reuters noted. The last time was from November 2014 to January 2015.

On Wednesday, bitcoin fell as low as US$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.

While many observers say the recent falls show that the bubble has burst, those backing the nascent markets say that regulation is welcomed and wild price swings to be expected.

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