What seemed to be a red hot streak for bitcoin looks like may have come to a stop. The cryptocurrency has now fallen 40 percent since its all time high of $19,343 in December, according to Coindesk prices.
Other cryptocurrencies fell by nearly as high as 40 percent in a 24 hour period on Tuesday.
According to local South Korea Yonhap News, cryptocurrency investors in South Korea will be fined for refusing to convert their virtual accounts into real-name ones, authorities said on Sunday.
Authorities are allowing investors to convert their virtual accounts this month, but afterwards, investors who haven’t will face fines. The fines have not been determined yet.
Currently, authorities have barred banks from offering virtual accounts, which are needed to sell or buy cryptocurrencies, in the latest move to prevent speculative investments. Opening anonymous accounts is also banned.
The craze has gotten out of hand in South Korea that The Korean Exchange notified its employees on Friday telling them to refrain from investing into the cryptocurrency market. Other agencies in South Korea such as the Fair Trade Commission, the Financial Supervisory Service and the Bank of Korea banned its employees from trading digital currency during business hours.
Along with South Korea, China has also moved to escalate its crackdown on cryptocurrency trading, according to Bloomberg. Sources familiar with the matter say that Chinese officials are targeting online platforms that offer investors to trade cryptocurrencies.
Chinese officials have already banned cryptocurrency exchanges, but trading and mining digital currencies still remain among the most popular in the world. The government is now looking to block domestic access to homegrown and offshore platforms that allow for centralized trading.
Authorities are also looking into individuals and companies that provide market-making, settlement and clearing services for centralized trading. Small peer-to-peer transactions aren’t being targeted, the sources said.
The news of Asia looking to regulate the digital market has led investors and traders to be more cautious, in result causing less trading volume. The lack of traders have led to investors to sell off positions due to highly speculative news, causing cryptocurrencies to crash.
"The pullback seems to be coming from a lack of buyers in Asia," Mati Greenspan, senior market analyst at eToro, told CNBC in an email.
"Japan and South Korea usually dominate this market but over the last few days, the volumes have been dropping steadily. This morning the combined volumes from these two countries dropped below 30 percent."
Despite the boom in the cryptocurrency market over the past year, the market cap has fallen drastically over the past few weeks. Previously, the market cap hit over $750 billion, as coins such as Ripple, Stellar, Cardano, NEO and Litecoin contributed heavily to the rise. Now, the cryptocurrency market cap has hit $590 billion.
Events like government authorities getting involved in the digital market is what leads to a sell off and price fluctuations, but this is also the reason why authorities want to regulate the currencies and protect investors. Although authorities are trying to regulate trading, investors are still not protected as there still are no rules set in stone for cryptocurrency.