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Cryptocurrencies slide amid growing investor fears

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An electronic board displays the price of Bitcoin at crypto exchange Upbit in Seoul. Yonhap

Cryptocurrencies slide amid growing investor fears

Cryptocurrencies remained in negative territory for a second day on July 14, with investor sentiment indicators hinting fear amid toughened regulations by financial watchdogs across the globe.

South Korea‘s digital asset exchange Upbit operator Dunamu’s Digital Asset Fear and Greed Index – standing at 29.76 on July 14, the lowest in 18 days – showed that investors were gripped by fear for the tenth consecutive day on July 14. An index figure between 20 and 40 means market sentiment is in fear and less than 20 suggests extreme fear.

Growing concerns over the market appear to be translated into the price fall of major cryptocurrencies, which have been stuck in a correction period for several weeks.

For instance, Bitcoin, the largest cryptocurrency, saw its price plunge from about 40 million won ($34,760) on July 12 to 37.8 million won on the afternoon of July 14. Bitcoin is in its eighth week of being stuck in a range of between roughly 35 and 45 million won, amid subdued trading volume recently.

According to market data provider CryptoCompare, the daily trading volume of Bitcoin last month shrank more than 40 per cent from May.

Ethereum, the second biggest cryptocurrency, also fell from 2.7 million won on July 8 to 2.2 million won on July 14.

The stretched period of correction in major cryptocurrency prices followed a series of negative events, including China’s effort to crack down on cryptocurrencies.

In May, the Chinese government, which is testing a digital yuan, placed restrictions on cryptocurrency mining and transactions. Last month, the British financial regulator banned Binance, one of the largest cryptocurrency exchanges, from operating in the country.

In South Korea, investors are concerned about the operation of local cryptocurrency exchanges as the operators are facing toughened law.

The country’s digital asset operators have to be equipped with a long list of measures for anti-money laundering. They also must forge partnerships with local banks to use real name accounts, but local lenders have been reluctant due to potential risks associated with the volatile cryptocurrency market.

Meanwhile, S&P Dow Jones, the leading index provider, decided to launch a five-cryptocurrency index earlier this week, but the news failed to revive the market sentiment.

THE KOREA HERALD/ASIA NEWS NETWORK

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