Prices of bitcoin and other digital currencies have skidded after South Korea's top financial policymaker said Tuesday that a crackdown on trading of crypto currencies was still possible.
On Wednesday, the dubbed "king of cryptocurrencies" dropped to below $10,000 for the first time since the end of November, before making a small recovery on Thursday.
While bitcoin, the world's largest cryptocurrency by market capitalization, is recovering slightly from a major crash earlier this week, onebear on the Street warns investors to steer clear of the digital currency space. South Korea announced a few days that they were seeking out ways to regulate cryptocurrencies, with rumors of an outright ban.
Many Asian countries are being blamed for a "FUD" (Fear, Uncertainty and Doubt) in the markets which was causing cryptocurrency rates to fall, resulting in a "bloodbath".
While cryptocurrencies inherently take the position that no government force can interfere in their existence, the prevalence of trading exchanges and other methods of transferring currency to cryptocurrency remain a topic of concern to many; if cryptocurrencies become less available to every-day investors, the thesis is that the long-term value of said "asset" is reduced over time. Russian president Vladamir Putin was also vocal about potential regulation of cryptocurrency, saying, "In broad terms, legislative regulation will be definitely required in the future". Well, some say not so much.
Makoto Sakuma, analyst at Tokyo-based NLI Research Institute, said trading volumes had been low despite the volatility.
"But while the rally phase is over, I don't think it is right to say bitcoin is finished".
However, unlike as in other nations, it is not just the tech-savvy who have jumped on the Bitcoin cryptocurrency band-wagon, but ordinary workers, housewives and even children, many of whom would never trade traditional stocks. Bitcoin's bearish price behaviour in the last one month is in direct contrast to its monster rally a year ago when its price showed a clear uptrend marked by higher highs and higher lows. Also true: There's a lot to lose if you invest unwisely.
The news has seen Bitcoin drop to its lowest point since the start of December previous year.