The rout in cryptocurrencies rolled on, sending Bitcoin to its lowest level since October, as worries over tighter regulation by U.S. Authorities and central bankers elsewhere gave traders fresh reasons to sell after a brutal start to 2018.
The selloff has now knocked more than half a trillion dollars from digital coins since early January. That’s shaken a nascent market whose core attraction — anonymity and decentralization — is being challenged as never before by regulators.
Bitcoin, the biggest virtual currency, sank 8.8% to $6,477 at 12:03 p.m. London time, after earlier sliding to as low as $5,922, according to Bloomberg composite pricing. Alternative coins Ripple, Ether, and Litecoin also tumbled at least 9%.
“Crypto is being driven by daily negative news,” said Craig Erlam, a senior market analyst in London at online trading firm Oanda Corp. “There’s regulation speculation in India, South Korea, and the U.S. And then there’s hacking, the Facebook situation and finally the Tether story has people worried as well.”
Read: Here’s Why Bitcoin Purchases Using Credit Cards Are Getting More Expensive
The slump got fresh momentum after a Bloomberg News report that America’s two top market watchdogs are planning to ask Congress to consider federal oversight for digital-currency trading platforms, many of which have been operating in a regulatory gray zone. Chiefs of the Commodity Futures Trading Commission and Securities and Exchange Commission will appear together at a Senate Banking Committee hearing to discuss cryptocurrencies on Tuesday.
In Europe, Bank for International Settlements General Manager Agustin Carstens said there is a “strong case” for authorities to rein in digital currencies because of their links to the established financial system. He argued that central banks — along with finance ministries, tax offices and financial market regulators — should police the “digital frontier.”
“The market is feeling regulatory pressure,” said Zhou Shuoji, a founding partner at FBG Capital, a Singapore-based cryptocurrency investment company.
Half Trillion-Dollar Loss
Cryptocurrencies tracked by Coinmarketcap.com have lost more than $500 billion of market value since early January as governments clamped down, credit-card issuers halted purchases and investors grew increasingly concerned that last year’s meteoric rise in digital assets was unjustified. This week’s selloff has coincided with a rout in global equities, with markets in Asia extending losses on Tuesday following a white-knuckle day for U.S. Stocks.
Some technical indicators suggest the rout in Bitcoin has further to go. The cryptocurrency’s Moving Average Convergence Divergence indicator, the most profitable of 22 trading signals tracked by Bloomberg over the past year, is flagging further downside after turning bearish in December.
Bitcoin also dipped below its 200-day moving average for the first time in more than two years on Tuesday. The last time that happened, in August 2015, the cryptocurrency sank as much as 24% over the following two weeks.
“We’re possibly heading back to where the true value of what Bitcoin should be,” Oanda’s Erlam said.