It’s a bad day for bitcoin. Is it going to get worse?
The price of bitcoin has plummeted nearly 14% in the last day, and the cryptocurrency is now trading below $12,000, according to MarketWatch. The Bitcoin Investment Trust (GBTC) has tumbled 13%, while Bitcoin Cash, ethereum, and litecoin are also taking hits.
A number of factors are at play, all suggesting greater scrutiny of bitcoin and other cryptocurrencies.
On Monday, Chinese authorities appeared ready limit online and mobile platforms offering exchange-like services, according to Bloomberg. To the Chinese government’s chagrin, its ban on crypto exchanges last year only resulted in activity moving on to alternative venues. Meanwhile, South Korea’s attempt to regulate bitcoin has resulted in public backlash — a petition on the presidential office website has collected more than 200,000 signatures. On Monday, the nation’s government spoke up: “Crytptocurrency is not a legally recognized currency,” said a statement.
Demands for more oversight are not just coming from Asia. A director of Germany’s central bank said on Monday that bitcoin should be regulated on an international scale, according to Reuters. France reportedly appointed a cryptocurrency “mission leader.”
Bitcoin isn’t just taking hits from regulators. A research paper on bitcoin price manipulation is also making the rounds. Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman recently published “Price Manipulation in the Bitcoin Ecosystem” in the Journal of Monetary Economics, which found that a single person likely drove bitcoin prices to $1,000 from $150 in just two months. Their work also shows that trading volume across exchanges ticked up on days where there was suspicious activity.
What’s worrisome is that a number of some online crypto exchanges have paused trading for hours at a time for one reason or another. If an outage hits just as a selloff occurs, all a crypto investor can do is watch the carnage.
Individually, any of these would be a blip. Together, they could add up to a whole lot more.