The price of Bitcoin has nosedived by 11 percent today to its lowest point since November 2017 amid a growing backlash against cryptocurrencies.
This drop came after an Indian politician said the government would take action to stop the use of virtual coins like Bitcoin, Ripple or Ethereum for payments.
Finance minister Arun Jaitley said: ‘The Government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.
‘The Government will explore use of block chain technology proactively for ushering in digital economy.”
Bitcoin dropped to a miserable low of $9,022 (£6,343) today, which is a long way from the high of almost $20,000 it hit at the end of last year.
It slid more than 26 percent last month in its worst monthly performance since January 2015.
Other cryptocurrencies, including Ripple, the third-largest by market value, and Bitcoin Cash, have also racked up double-digit declines in the last 24 hours, according to Coinmarketcap.com.
Ethereum was up slightly on yesterday, although it has lost value since the beginning of the week.
Last year’s explosive rise in the value of digital coins and the flood of new retail investors drawn to the market have rattled global regulators nervous about a sector used largely for speculation.
Officials have also warned that cryptocurrencies can be used by criminals to launder money.
India has likened the market to a Ponzi scheme.
Earlier this week, Facebook said it was banning all advertising that ‘promote financial products and services that are frequently associated with misleading or deceptive promotional practices, such as binary options, initial coin offerings and cryptocurrency’.
It was not clear whether the ban would affect all cryptocurrency adverts on the social media site. Facebook could not immediately be reached for comment.
A $530 million hack of Japanese cryptocurrency exchange Coincheck last week sent shudders through the market, along with the revelation that U.S. regulators are investigating two of the world’s biggest cryptocurrency players, Bitfinex and Tether .
‘Sentiment towards cryptocurrencies is turning sour with negative headlines pouring out from left, right and centre,” said Fawad Razaqzada, an analyst at FOREX.com
‘Concerns that Facebook is banning ads and major crypto exchanges shutting down have really silenced the hype and some people are probably having second thoughts about investing their hard-earned cash into digital currencies.’
In a development welcomed by cryptocurrency investors, the finance minister of South Korea, a major hub for digital coin trading, said on Wednesday there was no plan to outlaw their buying and selling after regulators had earlier pledged to do so.
Critics call cryptocurrencies a speculative mania that will end in tears for thousands of retail investors. Supporters say the price volatility is a distraction from the value of the underlying technology, which will transform the way money is stored and transferred and upend conventional banking.
‘Short-term pessimism misses the point that it could make the ecosystem thrive in the long term,’ said Charles Hayter, founder of London-based Cryptocompare.
International regulators are expected to debate how to address the risks posed by the market at the next G20 meeting in March.