Bitcoin and Ether, the two leading digital currencies, have plunged about 40% since September 1. In dollar terms, bitcoin has lost nearly $2,000 since the beginning of September, when it crossed the $5,000 mark (today it is around 3,000, it is even below that level), while Ether has dropped from $390 to $213.
A considerable setback, which has happened in a very short span of time and can be proof that the crypto-currencies bubble has exploded, or has been stoned by the authorities of several countries relevant to this market that have openly shown their disagreement with digital currency. The price of bitcoin has been inflated three times faster than the technological bubble.
The behavior of bitcoin in the last 3 years, which has grown 1,800%, has caught the attention of half world’s financial regulators, who have begun to see this currency as a threat to their financial system. Regulators in China, Russia and India have shown their disagreement over the influence of digital currency on the economy.
The People’s Bank of China (BPC) has been the body that expressed more openly, putting a ban on companies financing through bitcoin placements, the so-called Initial Coin Offerings (ICOs).
The central bank of Russia declared that it plans to regulate this market to reduce the illegal activities that it hides. Also the Federal Reserve of India (RBI), which has recognized that it has a group of experts studying the operation of crypto-currencies. In addition, a member of the executive of this central bank has acknowledged that the institution is not comfortable with bitcoin.
This week the Bank of England also drew attention to the dangers arising from the bitcoin boom. The Financial Conduct Authority (FCA) did not hesitate to call the financing through crypto-coins (ICOs) as speculative investments because of its high risk.
The warnings of the UK FCA included an acknowledgment of the limitations on supervising transactions with virtual currencies, adding that some of these ICOs remain out of the box.
Aside from the regulators, this week the statements of one of the most influential bankers of the United States have reached a great echo. JPMorgan CEO Jamie Dimon said that bitcoin is a fraud worse than the tulip bubble, while noting that “if I had a trader who operated with bitcoin I would fire him in a second.”