Is Bitcoin’s price fall of nearly 9 percent a healthy pullback?
Bitcoin fell Wednesday after indications of greater scrutiny from U.S. regulators.
At one point in the day, the digital currency declined by nearly $500, or about 8.7 percent to a low of $5,109.70, before regaining some of the lost ground, according to CoinDesk. The day’s low marked the digital currency’s lowest level since Thursday, the website’s data showed.
Bitcoin recovered in afternoon trading from its worst levels to trade 3 percent lower near $5,410, still up more than 5 times in price for the year, according to CoinDesk.
The U.S. Commodity Futures Trading Commission on Tuesday released a report titled “A CFTC Primer on Virtual Currencies.” The report said as a commodity, virtual currencies like bitcoin fall under the oversight of the commission when they are used “in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce.”
The Chicago Board Options Exchange has said it plans to launch its own bitcoin derivatives trading products by early next year.
Other digital currencies fell Wednesday as well. Ethereum briefly fell more than 7 percent, but was last trading 4 percent lower near $303.
Bitcoin hit a record high Friday of $5,856, up six times in value for the year. Those gains came ahead of potential splits in bitcoin into at least two other digital currencies in November. Investors bet the original bitcoin would hold its own after those events, just as bitcoin rose after its August 1 split into bitcoin and bitcoin cash.
“I think we’re seeing some profit taking,” said Benjamin Roberts, co-founder and CEO of Citizen Hex, an ethereum-focused start-up backed by three Canadian venture funds. “These markets are risky and many people try to reduce their risk by trading around the volatility.”
Bitcoin has proved resilient to regulatory scrutiny so far. It plunged $2,000 in September after a Chinese government crackdown on digital currencies but has since more than recovered those losses.