The price of bitcoin plunged below 8.5 million won ($7,789) last week. The price of other cryptocurrencies, including Ethereum and Ripple, also nearly halved.
Demand for virtual coins had been extreme here at one point in January, lifting prices in Korea 50 percent higher than those in the U.S. The so-called kimchi premium has since receded, as financial authorities announced a series of possible regulations for the highly volatile market.
The prices of virtual currencies are now even lower in Korea, and market observers newly dub the development the “kimchi discount.”
According to the nation’s leading exchange Bithumb, bitcoin’s price plunged below 8 million won last Friday, which investors called “black Friday,” and managed to recover to around 8.9 million won as of Feb. 5.
The price of bitcoin peaked at 25,884,000 won on Jan. 6, and suffered a 65 percent drop in less than a month. It is also the first time since Nov. 25 the price plunged below 10 million won.
Observers say the prices could drop even further because not only the Korean government but also the U.S. government heralded possible regulations on virtual coin trading.
An official hearing is scheduled at the U.S. Senate today where heads of the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission will discuss their monitoring system as well as possible regulations on the market.
Major banking groups such as JPMorgan Chase, Bank of America and Citi Group have also decided to ban cryptocurrency trading with their credit cards, according to the Wall Street Journal.
“I can say almost with certainty that cryptocurrencies will come to a bad end,” Berkshire Hathaway CEO Warren Buffett told CNBC in an interview.
New York University economist and longtime cryptocurrency skeptic Nouriel Roubini agreed.
“It is the biggest bubble in human history. And this mother of all bubbles is finally crashing,” he said.
Optimists rebutted that the downturn won’t last long.
“It is just early-year market blues,” said David Mondrus, longtime crypto enthusiast and CEO of blockchain-based research platform Trive.
“In 12 months, we won’t even remember it.”
This Black Friday follows reports on tougher regulations other than in Korea and the U.S. Indian Finance Minister Arun Jaitley told lawmakers Thursday his government does not consider cryptocurrencies as legal tender or currency. He said the government will take “all measures to eliminate use of these cryptoassets in financing illegitimate activities, or as part of the payment system,” though he didn’t elaborate further on what form the regulations might be.
original author: Jhoo Dong-chan