Most major digital currencies sold off sharply on Tuesday, but the declines in bitcoin slumped by 15 percent to drop below $12,000 for the first time since December 4. Ethereum, meanwhile, fell by over 20 percent to hover above $1,000, Litecoin was down 19 percent and Ripple is down 33 percent to $1.23 at the time of writing.
Prices weren't as bad as much of the rest of the market; Iota for example was down 27 percent while Monero was down 22 percent as of 8:51 a.m. HK/SIN.
Investors were spooked by fears regulators might clamp down on an asset whose value has skyrocketed in the past year. Cryptocurrencies have slid sharply this week after reports South Korea and China could ban trading, sparking worries of a wider regulatory crackdown.
In a post published by Reuters, Shuhei Fujise, chief analyst at Alt Design said that, “Cryptocurrencies could be capped in the current quarter ahead of G20 meeting in March, where policymakers could discuss tighter regulations,” while in a post by Bloomberg Steven Englander, head of research and strategy with Rafiki Capital said, "Cryptocurrency holders are trying to decide whether to abandon Bitcoin. The dilemma is that once you stop pricing Bitcoin and its derivatives as new assets that will head to the moon, the pricing model is more conventional and much less breathtaking.”
Speculators across the globe are struggling to determine when or how market watchdogs may rein in an industry that’s decentralized 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.
South Korea said on Monday that its plans to ban virtual coin exchanges had not yet been finalized as government agencies were still in talks to decide how to regulate the market.
“The plan to ban cryptocurrency exchanges, recently mentioned by the nation’s justice minister, is one measure in talks to curb speculative investments, which the government will carry on with enough discussion for before finalizing the decision,” an official at the Office for Government Policy Coordination told a news conference.
China, meanwhile, is set to escalate its clampdown on cryptocurrency trading, targeting online platforms and mobile apps that offer exchange-like services, according to people familiar with the matter.