Bitcoin plunges the most in more than seven weeks

Singapore — Bitcoin on Sunday plunged the most in more than seven weeks, just days after reaching a record.

The biggest crypto coin was down 8.5% at $55,810.32 by 2.52pm in Singapore on Sunday after earlier falling 15.1% to $51,707.51. Ether, the second-largest token, fell almost 18% before paring losses.

Several online reports attributed the plunge to speculation the US treasury may crack down on money laundering carried out through digital assets.

Bitcoin hit a high of $64,869.78 last week ahead of the debut trade for the cryptocurrency exchange Coinbase Global on the Nasdaq on Wednesday. The original crypto coin, bitcoin is valued at more than $1-trillion after a more than 800% surge in the past year.

Growing mainstream acceptance of cryptocurrencies has spurred bitcoin’s rally and other tokens to record highs. Interest in crypto went on the rise again after companies from PayPal to Square started enabling transactions in bitcoin on their systems, and Wall Street firms such as Morgan Stanley began providing access to the tokens to some of the wealthiest clients.

That’s despite lingering concerns about their volatility and usefulness as a method of payment. Dogecoin, a token created as a joke and which has been boosted by Elon Musk and Mark Cuban, rallied more than 110% on Friday before dropping the next day. Demand was so brisk for the token that investors trying to trade it on Robinhood crashed the site, the online exchange said in a blog post on Friday.

Governments are inspecting risks around the sector more closely as the investor base widens.

Federal Reserve chair Jerome Powell last week said bitcoin “is a little bit like gold” in that it’s more a vehicle for speculation than making payments. European Central Bank (ECB) president Christine Lagarde in January took aim at bitcoin’s role in facilitating criminal activity, saying the cryptocurrency has been enabling “funny business”.

Turkey’s central bank has banned the use of cryptocurrencies as a form of payment from April 30, saying the level of anonymity behind the digital tokens brings the risk of “non-recoverable” losses. India will propose a law that bans cryptocurrencies and fines anyone trading or holding such assets, Reuters reported in March, citing an unidentified senior government official with direct knowledge of the plan.

Crypto firms are beefing up their top ranks to shape the emerging regulatory environment and tackle lingering scepticism about digital tokens. Bitcoin’s most ardent proponents see it as a modern-day store of value and inflation hedge, while others fear a speculative bubble is building.

Bloomberg