Bitcoin tanks south of $ 12,000 after South Korean FM threatens outright shutdown

Last Updated: Tue, Jan 16, 2018 19:58 hrs
Bitcoin (Reuters image)

Data from Coinddesk's Bitcoin Price Index has shown valuations of Bitcoin and other popular crypto flavours such as Ethereum tank. Bitcoin has already slumped below $12,000 per coin, and at the writing of this story, it had slid to $11,958.73 while Ethereum was trading at $118.76.

The start of Tuesday, BTC hovered around $13251.15, while ETH was trading at a price of $1290.60.

The cryptocurrency, the biggest in valuation has slipped as much as 40% in less than a month owing to various concerns. And not very surprisingly, last traded prices of most cryptos including Ripple as well as Cardano were dipping according to data from various sources. The loss has been in the range of 18-25%.

Vatsal Srivastav puts forth Ripple as something different than bitcoin. In fact, it is a technology services provider, he explains in this piece. Read more here, to get a grasp of Ripple gets valued and how far its valuation can climb.

The pull-back was majorly attributed to tensions from Asian buyers. Japan and South Korea have majorly dominated the Asian markets, and combined volumes from both countries saw a dip. According to an industry estimate, trading in South Korean Won makes for nearly 5% of the total volume. Trading in USD leads with a majority 40% trading in dollars.

In fact, a bitcoin futures trader was quoted as saying that Koreans and Japanese paid a premium of over 20%, but seemed to get wiser in waiting for markets to even out.

Investors on social media have indicated that the talks of an outright ban in South Korea as well as thoughts of crackdowns have instilled fear. South Korean law authorities have concurred that the country may introduced a trading ban.

South Korea's Finance Minister Kim Dong-yeon was quoted in a radio program interview referring to an outright "shutdown of virtual currency exchanges" as one of the options the government could consider.

Secondly, the ban on mining in China, has sent a negative message to investors.

A report from Bloomberg on Monday, that China would be beefing up its action against online and app-based services, similar to bitcoin functionality further has spooked the investor community. The January Effect?

A trader from a bitcoin trading portal commented that the erosion in market value is not the first time, and in the last three years, historically the month of January was a low-time for cryptocurrencies.

Sify.com verified this from available data and found that in the past three financial years, the price of bitcoin indeed slumped in the month of January. In 2015, price of bitcoin at the start of January hovered around $313.92 and it slumped to $216.91. In January 2016, price differed from $434.46 (start of January), and nosedived to $367.13. Ditto in 2017, when price tanked from $997.69 at the start of January to $967.67 by the end of the month.

However prices before 2015 have indicated a stable January. In fact, prices have more or less appreciated in the month of January, except in the month of 2011 when prices remained fixed at $0.52 during the start and end of the month.

The biggest gain in the month of January was reported in 2014, when prices bounced from $770.44 at the start of the month to $848.29.

Besides the talks of ban, there has been news of various entities looking at blockchain technology. SWIFT, the international payments processing network had singed an MoU with seven securities depositories to look into how blockchain can be used for post-trade processes.

The agreement, was signed by Swift and the seven entities- US based Nasdaq market technology, Russia backed National Settlement Depository, Switzerland's Six Securities Services, South African Strate, Argentine's Caja de Valores, Chile's Deposito Central de Valores and the Abu Dhabi Securities Exchange.

The MoU will work ensure that DLT (distributed ledger technologies) play effectively with existing post-trade processes.

Shipping firm Maersk was looking at Blockchain and distributed technology in partnership with IBM. Maersk, according to its senior officials, looked at deploying a maritime insurance product using blockchain.

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