Cryptocurrencies fell further on Wednesday as concerns over restrictions and tighter regulation over trading intensified.
Bitcoin, the best-known and most widely-traded of the virtual currencies, fell a further 16.22% to $10,956 on Wednesday, falling below the $11,000 level that several strategists believed was a key support level.
The losses for cryptocurrencies over the past 48 hours have been largely a result of concerns that several countries are considering official measures to ban or regulate trade in the controversial digital currencies.
Kerrie Walsh at Capital Economics, said: "Given Bitcoin’s potential to disrupt the workings of monetary policy and the threat it poses to tax collection, authorities will probably want to get even tougher.
"While Bitcoin has overcome previous regulatory hurdles, it’s not certain that it could get past a bigger clampdown."
South Korea, China and France
South Korea is the third-biggest market in the world for bitcoin trades, and its plans to clamp down on exchanges have prompted an online petition with more than 200,000 signatures against such action.
China, meanwhile, has also suggested that it could ban the trade of cryptocurrencies and has already issued bans on so-called initial coin offerings and closed several domestic exchanges.
And on Monday, France's economy ministry announced it would investigate trade in cryptocurrencies and decide if tighter regulatory measures were appropriate.
"Financial heavyweight Warren Buffet has already warned that 'cryptocurrencies will come to a bad end', and very early signs can be reflected in Bitcoin’s bearish price action today," said Lukman Otunuga at FXTM.
"Market jitters over South Korea potentially banning cryptocurrency trading has effectively eroded investor appetite for Bitcoin," he added. "With reports on a renewed crackdown on the cryptocurrency in China fuelling anxiety over future restrictions, further losses could be on the cards in the near term."
Further clampdowns on cryptocurrency exchanges were reported on Wednesday. In the US, Bitconnect closed down its lending and exchange facilities following cease and desist orders from two states.
Accused of operating a Ponzi scheme, there were no details on how many investors using Bitconnect had lost money in the scheme or how much, but as Kai Sedgewick on Bitcoin.com reported: "It is almost certain that Bitconnect's 'intelligent trading bot' which makes profitable trades and then shares those dividends with community, does not exist".
Some fear that the longer cryptomania persists, the more likely it is that growth in unscrupulous practices will emerge to take advantage of those jumping on the bandwagon, expecting to make quick and easy profits from large and volatile swings in price.
"Scope for cryptocurrency debasement is limited only by network effects and switching costs, but those may be smaller than expected," said Teunis Brosens at ING.
- Bitcoin was down 16.22% at $10,956
- Ethereum fell 14.66% to $980.50
- Ripple lost 19.07% to $1.15
- Litecoin shed 14.82% to $183.71