Bitcoin briefly slid below $6,000 on Tuesday to its lowest point so far this year in a sell-off that has seen the cryptocurrency lose more than half its value.
Bitcoin has fallen heavily in recent sessions as a risk-off mood across markets, worries about a regulatory clampdown, and moves by banks to ban buying bitcoin on credit cards have rattled investors, pushing prices lower. The virtual currency hit a peak of almost $20,000 in December, receding to around $13,800 at the start of the new year.
On the Luxembourg-based Bitstamp exchange, bitcoin fell to as low as $5,920, its weakest since mid-November, before recovering back above $6,000. It was trading at $6,860 by 1315 GMT, almost flat on the day.
Other cryptocurrencies have also dropped sharply in value this week. Ethereum, the second-largest by market value, is down almost 11 percent over the past 24 hours, while the third-largest, Ripple, is down 7 percent, according to trade website Coinmarketcap.com. Bitcoin is down more than 10 percent in that period.
After a massive run-up in prices last year, in which investors across the world piled into the market, cryptocurrency prices have skidded lower this year at the same time as regulators have stepped up warnings about the risk of investing in them.
Regulatory clampdowns in South Korea and India and an advertising ban on Facebook have hit sentiment. Several banks announced in recent days that they were banning customers from buying cryptocurrencies using their credit cards.
Still, many cryptocurrency backers say that regulation should be welcomed, and that short-term price volatility is to be expected for a new market backed by a potentially powerful technology.
“This is an extremely volatile market,” said Iqbal Gandham, managing director at trading platform eToro.
Gandham said that his company had seen a drop in interest from investors wanting to trade digital coins in recent weeks amid the sell-off, but that levels of interest remained far higher than before the fourth quarter of last year.
“We are not seeing a mad panic. People are asking what is happening but they are also aware that there was a sharp rise in December,” he said.
Bitcoin gained more than 1,300 percent last year.
The plunge in its value has coincided with a heavy sell-off in global stock markets in recent days, a break from the traditional narrative often used as a selling point for bitcoin enthusiasts: that it is uncorrelated from other asset classes.
Like this report? Sign up for our daily newsletter to get our top reports.