Bitcoin and other cryptocurrencies tank

The price of stocks isn't the only thing that's falling through the floor. Bitcoin and other cryptocurrencies plunged...

Posted: Feb. 6, 2018 9:12 AM
Updated: Feb. 6, 2018 9:12 AM

The price of stocks isn't the only thing that's falling through the floor. Bitcoin and other cryptocurrencies plunged on Monday.

Bitcoin was down 15% for the day, while ethereum was down a whopping 20%, according to Coindesk.

The cryptocurrency plunge was happening as the Dow dropped more than 1,000 points on Monday, after closing down 666 points on Friday.

The trouble started brewing in December. The Securities and Exchange Commission and the FBI started to crack down on alleged fraud in fundraising by some cryptocurrency companies and traders.

Digital currency had been operating in a regulatory vacuum since bitcoin's debut in 2009. But regulators started paying closer attention and warned investors about potential scams. The SEC created a Cyber Unit to go after suspected fraudsters.

Garrick Hileman, a cryptocurrency researcher at the University of Cambridge, said some big banks also recently pushed back on digital currencies, which are not issued by any government, unlike traditional currencies.

"The recent spate of bad news continues for cryptocurrencies, with several important banks announcing a ban on the purchase of cryptocurrencies with credit cards," he said.

In Asia, where cryptocurrency is particularly popular, China and South Korea have both cracked down on cryptocurrency trading.

Concerns about new restrictions, and rumors over a potential ban in India, have fueled volatility in crypto prices.

Related: Dow drops more than 1,000 points

Bitcoin is the best known of virtual currencies and experienced a wild run-up in value last year to nearly $20,000 before plunging in December.

Hileman said the dramatic increase last year could also be contributing to the pullback in other cryptocurrencies like ethereum, which didn't experience the same level of volatility prior to the current comedown.

Another popular digital currency, litecoin, dropped 10% within a day on Monday. Ripple, which is sort of like a crypto penny stock, also fell 10%.

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