Bitcoin extends week-long decline amid added scrutiny

Bitcoin plunged another 12pc, extending a week of declines after regulators in the US and China ratcheted up scrutiny on cryptocurrencies.

Bitcoin plunged another 12pc, extending a week of declines. Photo by PHILIPPE LOPEZ / AFP

Bitcoin plunged another 12% overnight on Sunday, extending a week of declines after regulators in the U.S. and China ratcheted up scrutiny on cryptocurrencies.

After soaring earlier this year on a wave of investor interest, the price of cryptocurrencies slumped in the past week. Bitcoin has shed more than 30% since May 16, including Sunday’s drop. It is also down 50% from its all-time high of $64,788.34 set in April.

As of about 10:30 a.m. ET on Sunday, Bitcoin traded around $33,574, according to CoinDesk, after dropping as low as $32,727. Ethereum, the second-largest cryptocurrency, fell 18.6% overnight, to $1,956, which was an improvement from its 24-hour low of $1,873. Dogecoin fell 11.7%, to around 30 cents, but was as low as 28 cents.

Last month’s initial public offering of crypto exchange Coinbase (ticker: COIN) helped fuel enthusiasm for virtual currencies in the first months of the year. But digital currencies have lived up to their reputation as a volatile asset class.

Tesla CEO Elon Musk has also fanned the flames by tweeting provocatively about Dogecoin and Bitcoin in recent weeks after his electric car company bought $1.5 billion of Bitcoin in February. Musk first said he would accept Bitcoin as payment for Tesla cars, and then reversed that decision, citing the environmental effects of mining new coins.

On Wednesday, the Treasury Department said it wants to require businesses to report cryptocurrency transfers over $10,000 to the Internal Revenue Service as the tax agency gears up for a broader crackdown on tax evasion. That sent Bitcoin plunging 30% before recovering much of its losses.

Bitcoin fell below $40,000 earlier last week after the People’s Bank of China warned about recent speculation in the crypto market, reportedly saying financial and payment institutions were banned from pricing or conducting business in virtual currencies.

The Federal Reserve has also been examining the role of digital currency and plans to release a research paper this summer that outlines its thinking on the development of a central bank digital currency for use by the general public.

Still, the roller-coaster ride may prove to be too much, even for the big institutions that began backing Bitcoin and the blockchain technology behind it in recent years. For the first time in months, there is evidence that professional investors have been shifting their crypto assets to gold, J.P. Morgan said in a recent note.

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