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Bitcoin drops over increased scrutiny of exchanges, now down 18% over 2 days

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Bitcoin drops

Bitcoin drops

Bitcoin fell again Thursday, bringing its two-day losses to more than 18 percent, after news of increased regulatory scrutiny of cryptocurrency exchanges.

The cryptocurrency hit a high of $11,432 Tuesday but had fallen 18.4 percent to near $9,319 as of 3:34 p.m., according to CoinDesk’s bitcoin price index. Earlier Thursday, bitcoin’s losses suddenly accelerated and the cryptocurrency hit a low of $9,075.87, down just over 20 percent over the last two days.

The sudden midday drop “caught me by surprise,” said Nick Kirk, quantitative developer and data scientist at Cypher Capital, a cryptocurrency trading firm. “It could be a hangover from SEC news … but actually, I think regulation is a good thing for the space.”

Bitcoin dropped below $10,000 Wednesday after news of compromised accounts on a major Hong Kong-based exchange and a statement from the U.S. Securities and Exchange Commission that expanded its scrutiny to cryptocurrency exchanges. News overnight from Japanese regulators added to those concerns.

Some analysts also attributed bitcoin’s decline Thursday to technical factors.

Bitcoin failed to break above a resistance level around $11,765 on Monday, “and has been in corrective phase since,” said Robert Sluymer, technical strategist at Fundstrat Global Advisors.

“Yesterday as the exchange hack developed, bitcoin broke a key technical level that led to a collapse to its next support level [around] $9,400,” he said. “Today again, bitcoin retested this level and has yet show evidence that it will hold.”

The next levels of support are at $8,759 and $8,000, down about 5.8 percent and 14 percent, respectively, from Thursday afternoon’s prices.

Japan’s Financial Services Agency suspended operations Thursday at two relatively small exchanges, Bit Station and FSHO, for one month. The regulator said a manager at Bit Station used customers’ bitcoins for personal purposes, according to wires and a Google translation of an online statement.

Japanese authorities also ordered business improvements at five other exchanges, including Coincheck. The exchange lost more than $500 million worth of Nem’s xem coins due to a hack in late January. A senior official from the Japanese FSA said in a Reuters report that Coincheck had enough funds to reimburse customers.

The announcements followed news Wednesday that some accounts at Hong Kong-based Binance may have been compromised due to phishing.

“The [application programming interface] for the exchange malfunctioned and sent sell orders into the market,” said Brian Kelly, a CNBC contributor and head of BKCM, which runs a digital assets strategy for clients.

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Article Credit: CNBC

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