“There are no disagreements over regulating speculation,” such as using real-name accounts and levying taxes on cryptocurrency trading, Finance Minister Kim Dong-yeon is reported to have said this week.
He added that shutting down digital currency exchanges is “a live option but government ministries need to very seriously review it”.
Even if such a ban fails to materialise, South Korea could still impose strict new regulations on the market. Measures under discussion reportedly include bans on underage investors and anonymous trading accounts.
Such measures would discourage the use of digital currencies altogether.
Nothing concrete has been announced yet, but the speculation appears to have caused a huge amount of panic, with people now fearing the worst and looking to sell off their holdings as soon as possible.
At the same time, others will be tempted to buy up bitcoin now, while it’s relatively cheap, in the hope that the decline is only temporary.
Is the drop surprising?
Bitcoin is notoriously volatile, and it has suffered huge declines before.
After hitting a record high when it passed the $19,850 mark in mid-December, it tumbled rapidly, falling to below $12,000 within days. At one point, its value dropped by almost $2,000 in a single hour.
However, right now there are serious fears that a huge crackdown is coming.
If the trading of digital currencies is eventually banned in China and South Korea, bitcoin’s price could fall even further.
At the same time, the value of the notoriously volatile cryptocurrency has fluctuated unpredictably for weeks, and nobody truly knows whether it is about to rise or fall spectacularly.
Have ethereum, Ripple XRP and other altcoins dipped?
While bitcoin has declined by 12.65 per cent since yesterday, ethereum is down 17.45 per cent and Ripple XRP is down 21.05 per cent, at the time of publication.
Bitcoin Cash and Cardano, the fourth and fifth biggest digital currencies by market capitalisation, have fallen by 20.18 per cent and and 17.97 per cent, respectively.
In fact, all of the top 20 digital currencies by market capitalisation are in the red.
These falls are, once again, tied to fears that trading digital currencies could soon be banned.
Ahead of this week, bitcoin alternatives had soared in value. A large number of people are thought to have invested in them in the hope that they would go on to surge like bitcoin.
What do financial experts say?
A multitude of financial experts have described bitcoin as a bubble, which could keep inflating until it completely collapses.
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” he said. “When it happens or how or anything else, I don’t know.”
The overwhelming consensus amongst financial experts, however, is that its price will eventually crash.
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