The cryptocurrency suffered a nearly $6,000 crash on January 6, in a fresh blow to bitcoin traders. Investors have pointed to a crackdown on mining and blocks on a bitcoin spot trading fund.
As of 10:45pm on January 6, Bitcoin was trading at £31,920.10 according to CoinDesk.
However, at 7:29pm on January 5, the cryptocurrency was trading at £33,915.55.
The crash represents a decline of -5.88% over the course of one day.
Ethereum also collapsed between January 5-6, seeing a -3.34 per cent drop on the day at £2530.73.
The latest cryptocurrency price woes have seen a mysterious trader who owns the largest share of bitcoin in the world witness the collapse of the value of his portfolio..
According to BitInforCharts, the 34xp4vRoCGJym3xR7yCVPFHoCNxv4Twseo wallet was worth $16.29 billion (£12.28 billion) in cryptocurrency on Friday.
By Saturday morning, that had fallen to $15.45 billion (£11.65 billion) and then to $13.81 billion (£10.41 billion) by evening, eliminating $2.48 billion in a single day.
The trader saw the value of his stash drop by $5.5m (£4.15m) in less than a month.
Read More: Bitcoin Price Rally Expected to Reach $100,000 in 5 Years
This comes with the release of the minutes of the US Federal Reserve’s December meeting, in which the central bank indicated that it would reverse its supportive monetary policy, including reducing the number of bonds it holds.
Vijay Ayyar, vice president of corporate and international development at Cryptocurrency exchange Luno, explained to CNBC: “Overall, I think global markets have shown weakness in light of the Federal Reserve’s recent moves to raise interest rates.
Hence, I think yesterday’s drop is totally related. We saw US markets drop yesterday and as a result, all other risky asset classes underperformed including cryptocurrencies.
“With regards to Bitcoin and cryptocurrencies specifically, the past four weeks have seen some weak price action due to lack of interest/demand, the holiday season and potentially similar factors.”
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Yuya Hasegawa, a digital currency market analyst at the Japanese Bitcoin exchange, told CNBC that the cryptocurrency could drop further.
He said Bitcoin is likely to drop to $40,000 if December’s non-farm payroll data shows strong job growth.
He added, “The downward pressure on the price is expected to continue until the whole market prices in the future tighter monetary policy than expected.”
Goldman Sachs expects Bitcoin to reach $100,000 within five years if more investors see it as an alternative to gold.
In a research note, Zach Bundle, co-head of foreign exchange strategy, said: “Hypothetically, if Bitcoin’s share of the store of value market were to rise to 50 percent over the next five years (with no growth in overall demand for stores of value) Its price will go up to just over $100,000, for a compound annual return of 17 percent to 18 percent.”
However, in December, the Bank of England warned that Bitcoin could be “worthless” and that people investing in the digital currency should be prepared to lose everything.
Deputy Governor Sir John Cunliffe said the bank should be prepared for the risks associated with the rise of the crypto asset after its rapid growth in popularity.
He told the BBC: “The price can vary widely and [bitcoins] It can theoretically or practically drop to zero.”