Bitcoin had a lackluster week, with dramatic drops midweek that made some question the hype cryptocurrencies had generated in the latter months of 2017. And then it started to recover, reminding us how erratic cryptocurrencies are. Reports that regulators may soon come to get tough on the market and evocations of the Great Depression made for a particularly tempestuous week in the already-chaotic world of cryptocurrencies. So what happened—and does it mean anything?
Here’s a look back at how the week unfolded.
Bitcoin’s value recovered after a slight dip the day before, rising from around $13,200 early in the day to a high of around $14,000, before falling slightly again.
However, reports of potential regulatory crackdowns in East Asia also came out on Monday, which may have fueled the price plunges later in the week. South Korea’s finance minister claimed on the radio that the government is considering a ban on crypto exchanges, reconfirming previous comments from the country’s Justice Ministry.
Meanwhile, Bloomberg reported that the Chinese government is planning to block domestic access to centralized trading platforms and will further be targeting both companies and individuals who provide “market-making, settlement, and clearing services” for such trading.
Bitcoin’s price began its dramatic descent, coming to a six-week low of around $10,600. The turn of events led many pained commentators on Twitter to mark the date as a “Black Tuesday,” a reference to the 1929 Wall Street crash that led to the Great Depression. The Verge suggested that this crash latest bitcoin crash is more than just a cautionary tale in volatility. This week’s cratering may also be a preview into how the market reacts to what seems like a coming wave of regulatory activity around the world.
For example, BitConnect, an exchange that issued a token called BCC, was likely an early casualty of this increasing scrutiny. Its anonymous managers announced that they would be closing the exchange in the face of two cease-and-desist letters from state securities authorities, along with bad press and perpetual DDoS (denial-of-service) attacks. BCC itself had fallen by 65 percent since the beginning of the month.
Bitcoin’s value fell below $10,000, its nadir for the week. It was almost 50 percent below its $19,500 peak in December. Analysts feared at the time that the currency could drop as low as $5,605.
Although it seems likely that news of tightening regulations in Asia spurred the minor crash, as many of its countries are bustling hubs of cryptocurrency activity, it’s never entirely clear what motivates a slump or surge with these prices. While many experts blamed the potential government crackdowns, others suggested that the fall might have something to do with the fact that Asian traders are cashing out their bitcoin in order to have money on hand in anticipation for the Lunar New Year, a holiday celebrated throughout the continent in February that involves gifts, feasts, and travel.
Bitcoin had a bit of a recovery, rallying 30 percent to a high of around $12,000. Other cryptocurrencies that had seen losses similar to Bitcoin’s earlier in the week made a similar comeback.
Ethereum, which had seen a three-week low on Wednesday at around $780, again rose above the $1,000 mark. Ripple, which dropped as low as 90 cents on Wednesday, increased by 65 percent in value to $1.64.
As of this writing, bitcoin again peaked at around $12,000 on Friday. News of a coming crypto crackdowns also spread to the U.S., as New York’s Commodity Futures Trading Commission announced that it had filed lawsuits against three virtual currency operators for allegedly breaking a series of commodities rules like defrauding customers.
The commission charged a New York resident who runs CabbageTech, a company that allegedly told customers that its advice on bitcoin and litecoin trading would net them a 300% return on their investments within a week. CabbageTech apparently never offered the advice and disappeared after a customer had made the payment.
The commission also accused a Colorado resident who runs a company called The Entrepreneurs Headquarters of orchestrating a Ponzi scheme that solicited $1.1 million in bitcoin from 600 people. The third case is under seal.