Bitcoin approaches $7,000 after 10% fall in a single day

LONDON – The price of bitcoin dropped back below $US8,000 a coin and closed in on the $US7,000 on Monday amid persisting high volatility in the cryptocurrency markets.

Bitcoin initially dropped below $US8,000 on Friday during a wild day of trading that saw the cryptocurrency drop by as much as 15%, to a low of $US7,700, before jumping and eventually ending the day in positive territory, close to $US9,000.

After a reasonably stable weekend of trading, bitcoin’s slump resumed Monday, falling as much as 12% during afternoon trade.

As of 3.30 p.m. GMT (10.30 a.m. ET), bitcoin was approaching $US7,000 per coin, trading at $US7,297, a drop of 11% from its opening price, as the chart below illustrates:

Screen Shot 2018 02 05 at 15.31.07Markets Insider

The crypto market has been on the back foot since the start of the year, hit by fears of a regulatory crackdown and slipping Asian volumes. Bitcoin is now at less than half its December peak of over $US19,000.

Monday’s drop comes amid announcements from numerous major banks prohibiting the use of their credit cards to buy bitcoin and other cryptocurrencies. In the US, JPMorgan Chase, Bank of America, and Citigroup have announced bans, while Lloyds Banking Group is expected to do the same in the UK on Monday.

Confidence has also been dented after reports that China is planning a ban on websites related to ICOs and other forms of cryptocurrency trading.

“To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs,” an article in Financial News, a publication affiliated to the People’s Bank of China (PBOC) said, according to a report in the South China Morning Post.

More concerns emerged about the sector last week as Facebook banned cryptocurrency advertisements and US regulators began investigating tether, a cryptocurrency that some fear has been used to inflate the value of bitcoin.

Last week, India’s finance minister, Arun Jaitley, also said that the Indian government “does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto assets in financing illegitimate activities or as part of the payment system.”

Elsewhere in the crypto markets on Monday, Ethereum was lower by 6% to trade at $US778, while Ripple’s XRP was also 6% lower at $US0.76.

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