Cryptocurrencies tumble after trading desk plan shelved
Bitcoin drops 10% in 24 hours amid reports Goldman Sachs has gone cold
The cryptocurrency sell-off which has seen Bitcoin drop 10% looks set to extend into its third day, fuelling fears of a full-blown crash.
It is not clear what started the panic on Wednesday but it has been at least partly fuelled by a Business Insider report that Goldman Sachs has put plans to launch a Bitcoin trading desk on hold for the foreseeable future.
According to “people familiar with the matter”, the investment bank got cold feet about trading the digital currency because “the regulatory framework for crypto remains unclear”.
The US Securities and Exchange Commission (SEC) has warned some coins issued in initial coin offerings might be regarded as securities.
“That means that dealing in them would be subject to federal law”, says the BBC.
Other issues of concern around cryptocurrencies include potential money-laundering and market manipulation.
“Part of bitcoin's appeal has been its anonymity”, reports CNBC, and Forbes adds that it has “been suggested that the introduction of a registration process for popular instant bitcoin exchange ShapeShift may have spooked some users and added fuel to the sell-off”.
Amid growing concerns that Wall Street institutions are shunning cryptocurrencies, Bitcoin has lost two-thirds of its value in the past nine months. It was trading above $19,000 (£14,250) in mid-December, but is now hovering around $6,382 (£4,934), having dropped 10% in 24 hours.
Meanwhile, other digital coins also lost value on Thursday; with Ethereum down 12%, Litecoin losing 11%, and Ripple shedding 7%.
This is hardly surprising, says CNBC, as “digital currencies often move in lockstep with Bitcoin, which accounts for more than half of the digital currency market”.
Overall, Coinmarketcap estimates the market capitalisation of virtual currencies has lost three-quarters of its value since its January peak, slumping from $800bn to around $200bn now.