Bitcoin was well on track to post its ninth day of losses out of the last twelve after the South Korean government, fearing for the finances of a large portion of its population, announced it would be cracking down on cryptocurrency exchanges in an aim to curb the speculative nature of the market.
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Lots of red on that bitcoin table recently. <a href="https://t.co/JtFyzdmIrn">pic.twitter.com/JtFyzdmIrn</a></p>— Eddie van der Walt (@EdVanDerWalt) <a href="https://twitter.com/EdVanDerWalt/status/946371132663451649?ref_src=twsrc%5Etfw">December 28, 2017</a></blockquote>
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When South Korea announced the measures Bitcoin, as well as most of the other cryptocurrencies, took an 11% tumble instantly before recovering some ground later in the day.
Analysts were pointing out that the currency has now hit a bearish market, with some, like Mr Craig Erlam of Oanda Finance thinking that the anxiety will only rise further and that this is not the last of the falls we have seen: “Bitcoin is coming under selling pressure once again, with efforts by South Korean authorities to rein in speculation being blamed. While this is likely a contributing factor, I wonder if given the pre-holiday drop, whether speculators have become more sensitive to negative news.”
“We saw plenty of this in reverse on the way up, with positive news triggering significant rises and negative news being brushed aside. It wouldn’t surprise me if we see prices heading back below $10,000 before they find their feet again.”
The South Korean announcement indeed did most of the harm, with the statement from the Office for Government Policy Coordination reading that they will now require real-name cryptocurrency transactions and impose a ban on the offering of virtual accounts by banks to crypto-exchanges: “Cryptocurrency speculation has been irrationally overheated in Korea,”
“The government can’t leave the abnormal situation of speculation any longer.”
Some of the measures imposed by the South Korean government could even include a shutdown of any of the exchanges that do not abide by the new rules.