Bitcoin approached its lowest price for the year after Japanese regulators hit six of the country’s biggest cryptocurrency trading venues with business-improvement orders.
The crackdown surprised investors, ending what was about to be the first winning week since early June for the largest digital coin and for the 10 most-liquid tokens. The MVIS CryptoCompare Digital Assets 10 Index tumbled as much as 11 percent on Friday. The gauge already fell in five of the past six weeks.
Some of the targets of Japan’s regulator were quick to react. Bitflyer Inc. said it would stop accepting new customers and also review identity verification for some existing users after it received an order from Japan’s Financial Services Agency. The FSA called for improved measures at all the exchanges against money laundering. The companies must submit their plans by July 23.
Peer-to-peer money has come under fresh pressure in recent weeks after two South Korean exchanges said they were hacked.
That raised fresh concerns about the security of investor holdings. New pressure in Japan, one of the most crypto-friendly jurisdictions, demonstrated the market’s fragility to regulatory moves in the absence of much positive news.
“The market is still trading on low volumes and has yet to break out of its current downtrend, leaving itself susceptible to sell-offs,” said Ryan Rabaglia, head trader with cryptocurrency dealing firm Octagon Strategy Ltd. in Hong Kong, in an email. “Although the market reacted negatively, I view this as a positive for the industry as a whole.”
Bitcoin has been trending lower since early this year and has steadied above the $6000 area over the last couple of months. However, the continued ambivalence of regulators towards the market and the liquidation of Mt.Gox’s holdings represent headwinds which the market continues to explore the full ramifications of.
The price closed at a new closing low today and a clear upward dynamic will be required to question potential for additional downside.