Bitcoin, Rival Cryptocurrencies Plunge on Crackdown Fears

Alicia Cross
January 17, 2018

After a brief rally in yesterday's trade, the largest digital currency experienced a massive loss in value, amid fresh comments from South Korean minister regarding the possible ban on cryptocurrency trading.

South Korea is a hotbed for crypto-currency trading, accounting for some 20 percent of global bitcoin transactions, while much of the "mining" - computerised creation - of the coin units is undertaken in China. Its market capitalization declined to almost $2 billion, down significantly from the $327 billion it hit on December 17.

That came amid news that a senior Chinese central banker had said authorities should ban centralized trading of virtual currencies and prohibit individuals and businesses from providing related services.

Nearly one month ago, cryptocurrencies were trading at their highest levels, while Bitcoin was moving towards the $20,000 mark. The majority of digital currencies are down more than 10% in Tuesday trade.

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On the other hand, pessimistic reports from China also raised traders concerns. "Consumers need to be alert and extremely cautious as to avoid getting trapped in such Ponzi schemes", said the finance ministry, adding that virtual currencies were stored in digital/electronic format, making them vulnerable to hacking, loss of password, malware attack which might result in permanent loss of money. Cryptocurrency is a murky market with frequent swings.

"Bitcoin has dropped below $12,000, a level not seen since early December".

After previous generalized sell-offs, Bitcoin has rebounded as investors go back to the original decentralized currency, considered to be the "digital gold" in the space.

Bitcoin's underperformance may be due in part to doubt that the currency can continue delivering the same 1,400 percent returns it did previous year, spurring traders to look for smaller digital assets that promise more upside. Both these factors could force several other countries to take strict regulatory actions.

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