The value of Bitcoin, the largest virtual currency by market share, nosedived to $8186 (≈£5758) on Friday, February 2 – the lowest price recorded so far this year.
It’s unclear what triggered the dip, though it’s presumably not a coincidence that it came about a mere matter of hours after India voiced its desire to tighten regulation surrounding the use of digital currencies in the region.
India’s decision has been considered an extension to British Prime Minister Theresa May’s declaration in Davos on Thursday, January 25 to follow in South Korea’s footsteps by cracking down on so-called cryptocurrency platforms.
China, another hotbed for cryptocurrencies, has also shown an interest in tightening its iron grip on trading, focusing on prohibiting access to homegrown and offshore mobile applications that offer exchange-like services.
A recent report uncovered that a quarter of Bitcoin users have ties to criminal activity and that a little less than half of all Bitcoin transactions have been linked to illicit industries, like drug trafficking and hacking.
These customers are believed to conduct around 36 million transactions per annum, with a total value of $72 billion, the report revealed. They’re also predicted to hold around $8 billion worth of Bitcoin collectively.
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The cumulative effort between all four countries to regulate (read: to make individual transactions traceable) the trade of virtual currencies resulted in a number of owners rushing to offload their crypto at the same time.
It’s impossible to say whether Bitcoin – and other virtual currencies affected by impending clampdown – will recover, but one thing’s for certain: cryptocurrencies are highly volatile, so best exercise caution when trading.
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