Bitcoin dropped below $8000 today, Feb. 2, what makes down more than 25 percent week-on-week, for the first time since November, 2017 as continuing pressure causes fresh sell-offs across cryptocurrency markets.
Having breached the psychological support level of $9,000 earlier today fell to $8,056.51 at 11:39 UTC; its lowest level since Nov. 25. On a 24-hour basis, the cryptocurrency is down 14 percent, according to data source OnChinaFX.
The market has taken hit after hit in the days following its downward spiral from the aforementioned high, the only issue is that some of these catalyzing factors have been paper tigers or even worse, fake news.
In a speculative market such as the Bitcoin one, which welcomed a massive influx of relatively clueless speculators in the hype-rush to $20,000, bad news is especially bad news and damaging to investor confidence.
Also, it is worth noting that BTC prices on Korean exchanges now trade at a discount to prices on western exchanges. For instance, BTC is changing hands at $8,227 on Coinbase’s GDAX exchange, while on Bithumb, it’s at $7,960. So, prices on Korean exchanges are trading at a discount of more than $250.
Till last month, the premium on Korean exchanges (known as the “Kimchi premium”) was so high that it would distort the global average price of bitcoin. Thus, on Jan. 8 data source CoinMarketCap decided to exclude Korean prices from average calculations.
Bitcoin is not the only one taking a beating today. Ripple’s XRP token has depreciated by 31 percent in the last 24 hours. Ethereum’s ether token, bitcoin cash, NEO, and litecoin are down at least 20 percent each. Further, the total market capitalization of all cryptocurrencies together has declined by over $100 billion in 24 hours.
Since the start of the year, cryptocurrency markets have been hit by a string of negative news. For example, fears of tighter regulation in China and South Korea rocked the bitcoin freight train in January.
KYC / AML
Part of the reason for the pullback has been the regulatory environment, pointing to South Korea, for example. South Korean regulators uncovered $600 million in illicit trades in cryptocurrencies, even as the country is crafting regulation for cryptocurrency exchanges. South Korea has been instrumental in the rise of bitcoin and other digital coins, comprising about one-fifth of cryptocurrency trading activity across 12-plus exchanges in the country.
But their steps toward a more regulated cryptocurrency industry, more specifically KYC and AML protocols, are moving bitcoin forward, not backward, despite the toll it’s taken on the bitcoin price.
While the bitcoin price is getting punished amid the regulatory clampdown, bitcoin itself is not a proper choice for money laundering activities, despite what critics think.
For example, bitcoin is a “terrible choice” for hackers such as Wanna Cry ransomware attacks because the funds are traceable along the blockchain. More privacy-focused coins such as Monero or Zcash, for example, have the anonymity feature in money laundering, but not bitcoin.