What goes up must come down — and yesterday, it seemed it was cryptocurrency’s turn to take a dance with gravity.
Bitcoin saw its price drop by as much as 25 percent. Bitcoin losses, however, were probably felt a bit more acutely — by close of business in New York, bitcoin was trading for $10,370, a 48 percent fall-off from the peak price of $19,783 that it hit in mid-December 2017.
The fall was brought on by a variety of factors. Bitcoin future trading opened for the first time last month, and contracts trading on the Cboe exchange are scheduled to expire Wednesday for the first time since launch. As of now, the contract expiring later is slightly below the spot price of bitcoin — which is widely considered a bearish sign.
World governments — most notably South Korea, which seems to be a bit back and forth on the subject — have hinted that a ban on crypto-trading may be forthcoming, and Chinese authorities have made their intention to crack down on mining in-nation quite clear.
“This has clearly rattled investors. And understandably so,” said Kerrie Walsh, assistant economist at Capital Economics. “The more widespread bitcoin becomes, the more likely it is that stricter regulations will be enforced.”
Other mounting concerns are possible regulatory changes suggested by People’s Bank of China Vice Gov. Pan Gongsheng in an internal memo that would create a ban on centralized trading of cryptocurrencies, Reuters news agency reported Tuesday.
But bitcoin, by its nature, seems to be volatile — which means big drops happen and have been just as quickly reversed in recent memory. Bitcoin fell as much 30 percent between the 16th and 22nd of December and by about 25 percent in mid-November.
“Bitcoin’s market share continues to drop, with a potentially unlimited number of other cryptocurrencies available, increasing the risk of a price collapse,” said Mark Haefele, UBS Wealth Management’s global chief investment officer.