Bitcoin tumbles 20%

January’s cryptocurrency selloff got fresh impetus yesterday when bitcoin slumped as much as 20%, as the prospect of regulatory crackdowns appeared to spread.

While the largest digital coin trimmed its loss (later on), it was still at the lowest level since late December, according to composite pricing on Bloomberg.

As bitcoin halted its two-day rally, rival cryptocurrencies also tumbled. Ripple sank as much as 33% and ethereum dropped 24%, before both tokens pared some declines.

Speculators across the globe are struggling to determine when or how market watchdogs may rein in an industry that’s decentralised and derives much of its value from anonymous ownership.

Many assertions that digital coins represent a bubble have triggered double-digit selloffs over the past year, only to be followed by rebounds.

In South Korea, shutting down cryptocurrency exchanges is still an option, Finance Minister Kim Dong-yeon said in an interview with TBS radio.

But measures first need “serious” discussion among ministries, Kim added, holding out hope for traders that a crackdown won’t go that far. Kim said there’s irrational speculation and that rational regulation was needed.

“The finance minister made it clear they’re definitely considering banning crypto trading,” said Neil Wilson, at ETX Capital. “The news is hitting prices and broader sentiment, and it follows China’s move to shutter mines.

“We’ve heard reports that South Korea, China and Japan have considered a shared approach, a path, to regulation,” Wilson said, also citing a challenge to digital coins from a bill in the US Senate.

“It looks like the light touch that allowed the crypto-boom to explode may be coming to an end,” he wrote in a note to investors.

Lower-than-normal trading in Korea and Japan may have exaggerated the moves in Asia hours yesterday, said Mati Greenspan of the eToro currency platform.

Steven Maijoor of the European Securities and Markets Authority said investors “should be prepared to lose all their money in bitcoin”. – Bloomberg

They’re definitely considering banning crypto trading. The news is hitting prices and broader sentiment. Neil Wilson ETX Capital