It was a sea of red in the cryptocurrency market on Wednesday as most cryptocurrencies took a hammering, thanks to the news that South Korea might be banning all cryptocurrency trading in the near future.
“South Korea’s justice minister Park Sang-ki said on Thursday that the ministry is preparing a bill to ban cryptocurrency trading through its exchanges,” Reuters reported.
A few minutes after the news, at 4:47AM UTC, the entire cryptocurrency market suffered a 13% loss, shedding over $100 billion in market capitalization to fall from $730 billion all the way down to a low of $628 billion. According to data from CoinMarketCap, major cryptocurrencies such as Bitcoin, Ethereum and Ripple all suffered a double-digit percentage loss. Bitcoin hit a low of $13,105, while Ethereum and Ripple dipped to $1,149 and $1.62 respectively.
This fall in prices occurred right after most coins achieved all-time-highs in the first week of January. Ripple, which was valued at just under $0.20 a little over a month ago, reached an all-time-high of $3.84. Ethereum, too, reached a high of $1,390, while Cardano – priced at $0.11 a month ago – shot up to $1.28. All three of these coins suffered heavy losses after the South Korea fiasco, with Ripple taking the brunt of the blow, shedding 57% of its value.
South Korean Crypto Exchanges Raided
The South Korean raid was targeted at the country’s largest cryptocurrency exchanges.
“A few officials from the National Tax Service raided our office this week,” a representative of Coinone, a South Korean cryptocurrency exchange, told Reuters.
According to the Reuters report, another cryptocurrency exchange Bithumb was also under investigation by South Korean authorities.
This news is quite concerning to the cryptocurrency market as well as the community since more than 10 percent of Ethereum is traded against the South Korean won – the second most popular fiat currency used to trade cryptocurrencies behind the dollar (data obtained from CryptoCompare). Moreover, 5 percent of all bitcoin trades are against the won.
History Repeats Itself
However, this is not the first time the cryptocurrency market has suffered a blow like this. In September 2017, after China announced its clampdown on Bitcoin and other cryptocurrencies, the price of Bitcoin plummeted from a high of $4,857 to $3,260 – a 32.8% drop in value. Compared to that, Bitcoin’s dip in value today was a mere 13%.
Although there is a high chance that the cryptocurrency market will bounce back from this “crash” – judging by what happened last September – some of the biggest names on Wall Street are still not convinced by the prospect of it.
In an interview with CNBC on Wednesday, Warren Buffet, also known as the ‘Oracle of Omaha’ gave an ominous prediction about the fate of cryptocurrencies:
“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.”