Bitcoin slid to $10,000 on Wednesday for the first time since Dec. 1, leaving the cryptocurrency down by close to half from its peak hit last month.
Bitcoin’s selloff, sparked by fears of a regulatory crackdown, deepened Wednesday with the price of a single coin dropping below $10,000 for the first time since November and its total loss spiraling to 50% since its mid-December peak.
The mini-crash in Bitcoin is the latest bout of massive volatility for the upstart cryptocurrency that made big news last year when its price skyrocketed nearly 1,400%, creating a speculative frenzy for people around the world trying to get rich quick.
A day after falling 25%, bitcoin plunged another 9% Wednesday to around $9,635 per coin, or 50% lower than its mid-December peak of around $19,500.
Market watchers warned of a bubble last year when bitcoin skyrocketed, despite the fact that it is a fledgling digital currency that still hasn’t achieved widespread acceptance from governments or central banks around the globe. Billionaire investor Warren Buffett recently told CNBC that the current bitcoin frenzy “will end bad.”
The latest bitcoin price slide has been driven by fears that governments around the globe would move to limit bitcoin trading or squash it altogether. On Tuesday, news that South Korea is weighing a ban on trading on crypto exchanges, and reports that Chinese authorities were considering a ban on its local investors using foreign bitcoin exchanges, acted as a chilling effect.
There is debate on whether bitcoin, which is a stateless and unregulated digital currency, will ever replace traditional paper currencies like the dollar. Market watchers also question whether it will ever become anything more than a speculative asset class.
Bubble warnings have proven savvy in recent weeks as bitcoin’s value drop “abandon ship,” says Craig Erlam, senior market analyst at Oanda, a currency trading firm with offices in New York.
The question now, he says, is whether bitcoin and other cryptocurrencies, which have also fallen sharply in value early in 2018, will find their footing.
Given that last year’s rally had a big speculative component, could prove discouraging to people who saw bitcoin as an easy way to make a lot of money fast. That could make any recovery a more gradual process than prior bitcoin rebounds after steep drops.
“For now,” says Erlam, “it’s just a question of how low it will go, with $10,000 currently providing some reprieve.”
The South Korean government says it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil.