This article is from Barron’s
By Liz Moyer and Barbara Kollmeyer
Bitcoin prices stabilized on Monday, after investors endured another weekend tumble for cryptocurrencies.
A Sunday selloff for Bitcoin extended a week of declines following increased scrutiny on the sector by regulators in the U.S. and China.
After soaring earlier this year on a wave of investor interest, the price of cryptocurrencies slumped in the past week. From a May 16 price of $44,062, Bitcoin has dropped about 17%, including Sunday’s decline. It is also down about 43% from its all-time high of $64,788.34 set in April.
As of about 4:30 a.m. ET on Monday, Bitcoin traded around $36,400, bouncing off its 24-hour low of $31,179.69. It had been trading around $34,000 on Sunday evening, according to CoinDesk. Ethereum, the second-largest cryptocurrency, rose to $2,261.62 on Monday, from a 24-hour low of $1,733.58. Dogecoin was trading at 32 cents, well off its 24-hour low of 24 cents.
Last month’s initial public offering of crypto exchange Coinbase (ticker: COIN) helped fuel enthusiasm for virtual currencies in the first months of the year. But digital currencies have lived up to their reputation as a volatile asset class.
Tesla CEO Elon Musk has also fanned the flames by tweeting provocatively about Dogecoin and Bitcoin in recent weeks after his electric car company bought $1.5 billion of Bitcoin in February. Musk first said he would accept Bitcoin as payment for Tesla cars, and then reversed that decision, citing the environmental effects of mining new coins.
On Wednesday, the Treasury Department said it wants to require businesses to report cryptocurrency transfers over $10,000 to the Internal Revenue Service as the tax agency gears up for a broader crackdown on tax evasion. That sent Bitcoin plunging 30% before recovering much of its losses.
Bitcoin fell below $40,000 earlier last week after the People’s Bank of China warned about recent speculation in the crypto market, reportedly saying financial and payment institutions were banned from pricing or conducting business in virtual currencies.
The Federal Reserve has also been examining the role of digital currency and plans to release a research paper this summer that outlines its thinking on the development of a central bank digital currency for use by the general public.
Still, the roller-coaster ride may prove to be too much, even for the big institutions that began backing Bitcoin and the blockchain technology behind it in recent years. For the first time in months, there is evidence that professional investors have been shifting their crypto assets to gold, J.P. Morgan said in a recent note.