On Tuesday, bitcoin briefly slid below $6,000 reaching its lowest level this year in a sell-off that has caused the cryptocurrency to lose over half its value.
In recent sessions, the most well-known cryptocurrency has dropped significantly, as concerns regarding a regulatory crackdown and banks banning its purchase on credit cards have upset investors. Just in December, bitcoin reached a peak of nearly $20,000. On the Luxembourg-based Bitstamp exchange, bitcoin dropped as low as $5,920 before bouncing back above $6,000.
Other cryptocurrencies have followed suit losing a nice chunk of their value this week. Ethereum, the second-largest digital asset by market value, was down nearly 11 percent in the last day. Ripple, the third-largest, was down 7 percent, according to trade website Coinmarketcap.com. Bitcoin lost over 10 percent during the same period.
Following last year’s cryptocurrency frenzy, when investors across the globe dove head first into the market, prices have dropped this year as regulators have increased their warnings regarding the risks of investing in digital assets.
Regulatory crackdowns in South Korea and India and an advertising ban on Facebook have diminished outlook. Recently, several big banks announced banning customers from purchasing cryptocurrencies with their credit cards.
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However, several cryptocurrency backers believe that regulation should be embraced, and that short-term price volatility is to be expected.
“This is an extremely volatile market,” said Iqbal Gandham, managing director of a trading platform. Gandham said that his company has seen a decrease in interest from investors amid the sell-off, but that levels still remained much higher than last year’s fourth quarter.
“We are not seeing a mad panic. People are asking what is happening, but they are also aware that there was a sharp rise in December,” he said.
Bitcoin gained more than 1,300 percent in 2017. Its decrease in value has corresponded with the recent heavy sell-off in global stock markets.