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Bloomberg
The slide in cryptocurrencies accelerated this week, with Bitcoin piercing the $5,000 mark for the first time since October 2017, amid speculation that increased regulatory scrutiny will prompt issuers of initial coin offerings to liquidate holdings.
Bitcoin declined as much as 14 percent during US trading hours, falling just below $4,700 before bouncing back slightly. The largest digital currency was holding steady around $4,862 in Hong Kong. Rival coins Ether and Litecoin were largely flat after both tumbled as much as 16 percent overnight.
Last week, the SEC announced its first civil penalties against two cryptocurrency companies that didn’t register their initial coin offerings as securities. Airfox and Paragon Coin Inc. will each have to pay $250,000 in penalties to compensate investors, and will also have to register their digital tokens as securities.
“The selloff is related to enforcement, which is almost certainly underway,†said Justin Litchfield, chief technology officer at ProChain Capital.
“Projects are being made to return investor money, which, after having spent a ton of money marketing their $100 million ICO on a lavish party-filled road-show that was the norm for this vintage of ICOs, will be tough.â€
Speculation that the sell-off was triggered by the SEC ruling may be overblown. Many of the ICOs done have already drained their wallets and likely converted their cryptocurrency into fiat, according to researcher Elementus.
Volatility has returned to cryptocurrencies, with the largest tokens shedding billions in market value since the hard fork of Bitcoin Cash debuted last week. That came as two software-development factions failed to agree on a way to upgrade the offshoot of the original Bitcoin, leading to a computing power arms race.
The cryptocurrency industry has now lost more than
$670 billion in value from a January peak, according to data from CoinMarketCap.com. Bitcoin is down more than 70 percent from its December 2017 high, the data show.