Bitcoin sank the most in more than seven weeks, just days after hitting a record high.
The largest crypto currency fell 8.5% to $ 55,810.32 at 2:52 pm in Singapore on Sunday, after falling as much as 15.1% to $ 51,707.51. Ether, the second-largest token, fell nearly 18% before cutting losses.
Various reports online attributed the drop to speculation that the US Treasury could crack down on money laundering that takes place through digital assets.
Bitcoin hit a record high of $ 64,869.78 last week ahead of the debut trade for cryptocurrency exchange Coinbase Global Inc. on the Nasdaq on Wednesday. The original crypto currency, Bitcoin, is valued at more than $ 1 trillion after an increase of more than 800% in the last year.
Bitcoin Nears $ 65,000 With Coinbase Listing Driving Demand
The growing widespread acceptance of cryptocurrencies has spurred Bitcoin’s rally as well as raised other tokens to record highs. Interest in cryptocurrencies surged again after companies from PayPal to Square began allowing Bitcoin transactions on their systems, and Wall Street firms such as Morgan Stanley began providing access to the tokens to some of the wealthiest clients.
That’s despite lingering concerns about its volatility and usefulness as a payment method. Dogecoin, a token created as a joke and powered by the likes of Elon Musk and Mark Cuban, rallied more than 110% on Friday before plummeting the next day. Demand was so swift for the token that investors trying to trade it on Robinhood collapsed the site, the online exchange said in a blog post on Friday.
Governments are monitoring the risks in the sector more closely as the investor base broadens.
Federal Reserve Chairman Jerome Powell said last week that Bitcoin “is a bit like gold” in the sense that it is more of a vehicle for speculation than making payments. European Central Bank President Christine Lagarde in January pointed to Bitcoin’s role in facilitating criminal activity, saying the cryptocurrency has enabled “fun businesses.”
Turkey’s central bank has banned the use of cryptocurrencies as a form of payment as of April 30, saying that the level of anonymity behind digital tokens carries the risk of “non-recoverable” losses. India will propose a law banning cryptocurrencies and fine anyone who trades or owns such assets, Reuters reported in March, citing an unidentified senior government official with direct knowledge of the plan.
Crypto firms are beefing up their top ranks to shape the emerging regulatory environment and address persistent skepticism about digital tokens. Bitcoin’s most fervent proponents see it as a store of value and a hedge of today’s inflation, while others fear a speculative bubble is forming.
(Updates to Regulators’ Concerns from the 7th Paragraph)