Bitcoin lost ground Friday morning to fall below $6,000 and the top cryptocurrency hit a new low for the year thus far on weaker volumes amid rising concerns over stricter regulation for the nascent market across the world.
The leading cryptocurrency, Bitcoin, hit a low of $5,774.72 on the crypto exchange BitStamp, which was the lowest level since November 12 last year, when it sunk to $5555.55. Bitcoin hit its peak around $20,000 in December.
As of 8.51 am ET on Friday, Bitcoin was down 4.06 percent at $5,857.00 and the second leading crypto, Ethereum, was lower by 6.38 percent at $409.14 on Coinbase. Overall cryptocurrency market capitalization decreased more than $10 billion from a day earlier to $234 billion around 7.45 am ET on CoinMarketCap.
Since the boom in digital currencies witnessed late 2017, investors are concerned regarding the impact of increased regulatory oversight in key markets such as Japan and South Korea. Market sentiment was also hurt by repeated incidents of hacking in cryptocurrency exchanges, including major ones such as South Korea's Bithumb.
This week, market observers were apparently expecting a fresh slide in Bitcoin soon as volumes thinned in past few days.
Further, central bankers across the world suggested that cryptocurrencies do not fulfill the criteria to be considered a rival for fiat money or an asset. They perform poorly as a store of value, thanks to the high volatility in their prices, bankers have noted.
Meanwhile, regulators and central banks are mulling if Bitcoin and its peers could be classified as securities. At the start of this week, Hyun Song Shin, economic adviser and head of research at the Basel, Switzerland-based Bank for International Settlements or BIS, said cryptocurrencies should be treated as securities.
In its annual report released last week, the BIS warned that Bitcoin could break the internet and it suffered from a range of shortcoming. Digital currencies are not scalable and could suffer a breakdown in trust and efficiency as more and more people use it, the bank said.
Bitcoin enthusiasts, however, continue to remain optimistic as they expect institutional investors to enter the cryptocurrency arena this year, which could lead to huge investments and a strong revival of the market.
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