Bitcoin slumps to $10000, half its peak price, as regulatory fears grow

Less than two weeks ago, the cryptocurrency market reached an all-time high above $830 billion, before fears that South Korea, China, and Russian Federation were all mulling crackdowns on mining and exchanges lead to a global sell off. According to market charts dating back to 2011, and the very beginning of bitcoin, this is just a simple market correction in January, which has been the case each year since then. The depreciation of the cryptocurrency with largest market value continues, against the backdrop of the increasing intentions of regulators around the world to introduce rules to curb the growth of the cryptocurrency industry.

That said, there are other indications this slump is also a result of separate, more transient factors.

The BBC reports that the appeal against cryptocurrency regulation has been "amplified" by the current state of the South Korean economy.

While its has recovered slightly, this has pushed Bitcoin below $10,000, half what it was worth at its peak. This has had a knock-on effect to other cryptocurrencies, with Ethereum Bitcoin Cash, Litecoin and Iota all seeing drops too.

On Wednesday, bitcoin fell as low as US$9,222 on Bitstamp, its lowest price since December 1, as CBOE and CME bitcoin futures tumbled to contract lows. It was a far cry from its peak close to $20,000 in December, when the virtual currency had risen almost 2,000 per cent over the year.

"It's mainly been regulatory issues which are haunting (bitcoin), with news around South Korea's further crackdown on trading the driver today", said Think Markets chief strategist Naeem Aslam, who holds what he described as "substantial" amounts of bitcoin, Ethereum and Ripple.

"The volatility of bitcoin - and other crypto currencies - is an expected, and important, part of the journey to becoming a mature asset class". These types of swings are not uncommon for Bitcoin, and those who believe in the cryptocurrency's long-term resiliency will point out that this time previous year Bitcoin was trading for less than $900. Bitcoin is also falling, down nearly 3% against the dollar at the same time. The country confirmed earlier this week that it was seeking to further clamp down on its restrictions against virtual currencies by eliminating cryptocurrency trading.

South Korea is considering a new law that would outlaw cryptocurrency exchanges in a bid to quell speculative frenzy and criminal transactions.

  • Jon Douglas