The cryptocurrency market has faced a prolonged downturn in 2018, with Bitcoin recently plunging below the $7,000 mark to around $6,600—a nearly 50% decline over the past two months.
Data from leading global digital asset exchanges reveals that Bitcoin's price began its downward trajectory in December 2017, erasing 65% of its peak market value.
Widespread Decline Across Major Cryptocurrencies
Other major cryptocurrencies have mirrored this downward trend:
- Ethereum (ETH): Down 60% from its January 2018 peak, currently trading near $380.
- Ripple (XRP): Lost over 50% in value in the past month, with severe market capitalization shrinkage.
- Bitcoin Cash (BCH): Ranked as the fourth-largest cryptocurrency, now trading at approximately $870—a 46% drop from its February high of $1,630.
Tightening Global Regulations Fuel the Downturn
Increased regulatory scrutiny worldwide is a key driver behind the cooling cryptocurrency frenzy. Analysts note that U.S. tax reporting requirements for digital assets—due by mid-April—have prompted many first-time investors to sell their holdings to cover capital gains taxes in cash.
In late March, China’s central bank announced plans to intensify its crackdown on virtual currencies during the National Currency and Banking Work Conference. This triggered a 10% drop in Bitcoin prices across global exchanges, with Bitfinex briefly hitting $6,300.
Regulatory Actions in Japan and South Korea
- Japan: The Financial Services Agency (FSA) expanded inspections of cryptocurrency exchanges following Coincheck’s $500 million hack in January. Two exchanges (Bitstation and FSHO) were ordered to suspend operations for a month, while five others, including Coincheck, were mandated to strengthen internal controls.
- South Korea: The government banned public officials from holding or trading virtual currencies. Authorities like the FSC and the National Tax Service are also exploring capital gains taxes on crypto transactions.
Rising Skepticism and "Bubble" Warnings
Critics have renewed warnings about Bitcoin’s volatility and speculative nature:
- Nouriel Roubini, the economist dubbed "Dr. Doom," declared Bitcoin’s fundamental value as zero, calling it "the mother of all bubbles" and a "Ponzi scheme." He highlighted its $50-per-transaction cost as unsustainable.
- Economists Richard Jackman (LSE) and Savvas Savouri (Toscafund) argued that cryptocurrencies are vastly overpriced, suggesting a fair value closer to $20.
👉 Stay updated on crypto market trends
FAQs
Q: Why is Bitcoin’s price falling?
A: Regulatory pressures, tax obligations, and waning investor confidence are driving the decline.
Q: Are other cryptocurrencies affected?
A: Yes—Ethereum, Ripple, and Bitcoin Cash have all seen significant drops alongside Bitcoin.
Q: What’s next for cryptocurrency regulations?
A: Governments worldwide are likely to introduce stricter oversight, potentially including taxes and trading restrictions.