Bitcoin has suffered another grim 24 hours after its price tumbled more than seven percent on Wednesday.
The price drop was caused by mass selloffs by investors who are worried that governments are about to launch clampdowns on the trading of virtual coins.
Hundreds of other cryptocurrencies including Ripple and Ethereum also took a nosedive, with experts describing the catastrophic price plunge as a ‘bloodbath’.
Bitcoin extended its sharp tumble of the past 24 hours, skidding more than seven percent on Wednesday in a rapid downturn in fortunes as investors were spooked by fears regulators might clamp down on an asset whose value has skyrocketed in the past year.
The price of the world’s biggest and best-known cryptocurrency fell to as low as $10,567 (£7,663) on the Luxembourg-based Bitstamp exchange, not far from its six-week low of $10,162 it reached the previous day.
It led the fall in cryptocurrencies, although others slid sharply this week after reports South Korea and China could ban trading, sparking worries of a wider regulatory crackdown.
‘Cryptocurrencies could be capped in the current quarter ahead of G20 meeting in March, where policymakers could discuss tighter regulations,’ said Shuhei Fujise, chief analyst at Alt Design.
At its lows on Tuesday, bitcoin had fallen 25 percent, its biggest daily decline in four months.
It was a far cry from a peak which saw its value get close to $20,000 in December after the virtual currency had risen nearly 2000 percent over the year.
Tuesday’s decline followed reports that South Korea’s finance minister had said banning trading in cryptocurrencies was still an option and that the government plans a set of measures to clamp down on the ‘irrational’ cryptocurrency investment craze.
Separately, a senior Chinese central banker said authorities should ban centralised trading of virtual currencies as well as individuals and businesses that provide related services.
‘Bitcoin is deciding whether this is the moment to crash and burn,’ said Steven Englander, head of strategy at New York-based Rafiki Capital.
‘My conjecture is that cryptocurrency holders are trying to decide whether to abandon Bitcoin because its limitations mean it will be superseded by better products or bet that it can thrive despite them.’
Makoto Sakuma, analyst at Tokyo-based NLI Research Institute, said trading volumes had been low despite the volatility.
‘I would say the strong rally in Bitcoin and other cryptocurrencies we saw last year is over,’ he said.
‘But while the rally phase is over, I don’t think it is right to say bitcoin is finished.’