Cryptocurrency valuations plummeted this weekend in their most significant one-day fall since February.
The fall in prices, including a 15% loss for Bitcoin, seems to be correlated with reports in the US that the Treasury plans to take on financial institutions involved in money laundering using digital currencies.
Another contributor to the fall in cryptocurrency prices was a blackout in the Xinjiang region of China. This part of the world is responsible for a considerable amount of Bitcoin mining, where new digital coins are created.
Bitcoin lost around $8,000 per coin on Sunday, trading 12% down at $54,900 after reaching a day high of $61,293. It went as low as $55,409 but remains incredibly volatile.
The sudden crash for Bitcoin resulted in speculators selling more than one million positions, liquidating around $10 billion in Bitcoin positions.
Cryptocurrency prices tumbled
Along with Bitcoin, other cryptocurrencies also lost value.
The second-biggest cryptocurrency by market capitalisation, Ethereum, fell by 17%. Litecoin was down 24% on the day.
It follows a generally positive week for the cryptocurrency market, with digital coin exchange Coinbase listing on the Nasdaq index on Wednesday.
The last time we saw such significant price falls for Bitcoin was in February when its price fell suddenly to $43,000 because more traditional investment assets looked more attractive.
Cryptocurrency prices have experienced a lot of volatility in recent months, with governments and financial services regulators considering how to approach the sector.
Turkish Bitcoin ban
On Friday, the Central Bank of Turkey banned the use of cryptocurrencies as a way to pay for goods and services, leading to a 4% fall in the value of Bitcoin.
Turkey cited the ban as driven by the absence of “central authority regulation” or “supervision mechanisms” for digital assets.
It also warned speculators that investing in cryptocurrencies can result in “non-recoverable losses for the parties to the transactions” as a result of the absence of regulation. The ban in Turkey comes into force at the end of the month.
As recently as last year, several financial institutions and high-profile investors gave their support to cryptocurrencies and blockchain technologies, driving the price of Bitcoin and other cryptocurrencies higher.
The price of Bitcoin has more than doubled in the past six months, with its market capitalisation exceeding $1 trillion for the first time earlier this year.