Bitcoin goes straight to the bottom

South Korean officials’ remarks have swayed the global markets for bitcoin and other cryptocurrencies in the last few weeks.

Why has bitcoin’s price fallen? The chief of South Korea’s Financial Services Commission also confirmed in parliament on January 18 that the country is considering closing all cryptocurrency exchanges or, at the very least, those found breaking the law.

South Korea’s justice minister had said last week the ministry was preparing a bill to ban cryptocurrency trading, which sent bitcoin prices plummeting. And as for the recent nosedive, cryptocurrency investors seem to be reacting to news that South Korea may issue a ban on digital coin trading.

A Blockchain and Bitcoin Conference will be held in Manila starting on January the 25. “It has an extremely volatile value, which undermines its use as a currency”, he said. But when the price starts to drop, some of them inevitably lose their nerve and panic-sell, accelerating the price decline. Others, however, are taking a more pragmatic approach.

The huge losses, however, are not just in Bitcoin.

Bitcoin had a huge boom throughout 2017, creeping up above the $1000 mark in January a year ago and hitting as high as $20,000 in December. At one point, its value dropped by nearly $2,000 in a single hour.

Bitcoin’s big dip has been matched by rapid downturns in Ethereum and Ripple, the second and third-biggest crytocurrencies.

While the largest digital coin trimmed its loss and was down 13 per cent at US$12,146 as of 8:28 a.m.in NY, it was still at the lowest level since late December, according to composite pricing on Bloomberg.

In fact, all of the top 20 digital currencies by market capitalisation are in the red. Although prices recovered late in Wednesday trading, analysts have a bearish outlook for digital currencies.

US dollar-bitcoin trading accounted for about 40 percent of trading volume, while the Japanese yen accounted for about 29 percent, according to CryptoCompare.

What do financial experts say?

This has prompted fears a burst in the Bitcoin bubble could have wide-ranging and potentially devastating effects and stirred the authorities into action.