Bitcoin declined sharply on Tuesday, leading a broad downtrend in the crypto market as South Korea moved to implement new regulations governing domestic exchanges.
The world’s most actively traded cryptocurrency became much cheaper on Tuesday as prices briefly fell below $10,000 on the major exchanges. At its lowest, bitcoin reached $9,839 for a loss of more than 12%. At the time of writing, bitcoin was trading at $10161, where it was down 9.8% from the previous close.
Tuesday’s drop gives bitcoin a market cap of roughly $170 billion, easily tops among active cryptocurrencies but well below all-time highs of around $340 billion.
In terms of daily volumes, more than $7.5 billion wort of BTC traded hands on Tuesday, with Bitfinex, Binance and OKEx accounting for the largest share of transactions.
The latest price collapse has pulled BTC into bearish territory, which could leave the coin vulnerable to further declines. Traders are now targeting yearly lows near $9,200 as the next major support zone. Bearish momentum is likely to remain intact insofar as prices hold below $11,000.
Bitcoin’s share of the total cryptocurrency market has dwindled to roughly 33%. At its lowest, bitcoin constituted roughly 32.4% of the market during the height of the altcoin rally earlier this month.
The value of all cryptocurrencies plunged double-digits on Tuesday, with the total market cap bottoming out at $498 billion, according to CoinMarketCap. The market has since recovered to $512 billion for a daily loss of 10%.
All but four of the world’s top-100 cryptocurrencies traded lower on Tuesday, with most assets in the top-ten trading at a double-digit loss. Ethereum was down 8%, Ripple 12% and bitcoin cash 10%, based on the latest valuations.
South Korea’s New Rules Take Effect
Once the center of crypto market euphoria, South Korea emerged in January as the main source of volatility after government officials announced they were looking to restrict trading on digital currency exchanges. After much deliberation, regulators agreed to ban anonymous cryptocurrency trading beginning Jan. 30.
Regulators will likely monitor the impact of the new law before deciding whether additional measures are needed.
The need to control cryptocurrency speculation has become more apparent in recent months as South Koreans continued to pour billions into domestic exchanges. South Koreans are particularly known for speculating on altcoins, a segment of the digital currency market that now accounts for two-thirds of the total value.
In neighboring Japan, regulators are also looking more closely at cryptocurrency trading after hackers made off with more than $400 million worth of NEM coins on Friday. Representatives from the NEM Foundation announced on Tuesday that the hackers attempted to sell some of the stolen funds using various online exchanges. The exchanges have been notified about the accounts in question.
As cryptocurrencies climb in value, exchanges will become even more susceptible to attacks from sophisticated hackers. Since 2011, there have been at least three dozen thefts of digital currency exchanges, with Tokyo-based Coincheck being the largest.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.