Bitcoin fell to the $6,000 mark on Tuesday, leading the rest of the cryptocurrencies lower, as investors took to government bond and precious metal havens to avoid a widespread sell off in risk assets.
Stock markets have fallen sharply across the globe in the past two trading sessions and cryptocurrency investors sold down their positions also as the sell off extended into other higher-risk areas of the financial markets.
The sell off in cryptocurrencies began several weeks before the equity market correction, but both appeared to be predicated on concerns over lofty valuations.
And while it's been suggested stock market investors are concerned over the likely response from central banks to higher inflation expectations, with cryptocurrency investors, the problem has been with the response of governments to the proliferation of unregulated exchanges.
Since bitcoin hit its near $20,000 peak in December, it has now lost more than two-thirds of its value, sinking as low as $6,000 on Tuesday.
News of exchanges operating Ponzi schemes, or losing hundreds of millions of dollars to hackers, has drawn much negative attention. But more importantly regulators have become more determined than ever to make some changes to way crypto-exchanges operate.
Centtrip's Miles Eakers, commenting on recent action by China, said: "Governments across the globe continue to clamp down on retail investors speculating on cryptocurrencies, with the People’s Bank of China stating it would step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs, ‘to prevent financial risks'.
"We envisage this decline will continue, setting the next technical level at $5,000 a coin."
During early trade in London, the main cryptocurrency moves were as follows:
- Bitcoin fell 22.32% to $6,214
- Ethereum shed 27.54% to $586
- Ripple lost 24.48% to $0.595
- Litecoin slid 25.55% to $107.05