Bitcoin falls below $US9,000 amid Facebook's ban and India crackdown

Bitcoin falls below $US9,000 amid Facebook's ban and India crackdown

Bitcoin falls below $US9,000 amid Facebook's ban and India crackdown

Updated 7 February 2018, 14:55 AEDT

It's been a horrid week for digital currencies — with the sell-off sparked by India's crackdown, Facebook's advertising ban and Japan's biggest crypto exchange getting hacked.

After a merciless week of cryptocurrency crackdowns and a major hacking incident, the price of bitcoin plunged to $US8,590 on Friday morning (AEDT).

Key points:

  • The price of Bitcoin and other cryptocurrencies fell sharply in the last week
  • India is the latest country to consider a crackdown on cryptocurrencies
  • Facebook imposed a new policy banning cryptocurrency advertising

That is less than half of what it was fetching just six weeks ago, when bitcoin hit its all-time high of $US19,343 in mid-December.

None of the other major cryptocurrencies were able to escape the bloodbath.

Since Monday, ethereum has tumbled to US$967, and ripple is sharply lower at 85 US cents — down 22 and 39 per cent respectively.

As for bitcoin itself, it has fallen by 28 per cent since the week began.

India cracks down on crypto-assets

The latest trigger for the crypto sell-off was a speech by India's finance minister Arun Jaitley on Thursday.

The government "does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system", Mr Jaitley told parliamentarians in New Delhi.

But he also said the Indian government would explore the potentials of blockchain, the underlying technology behind bitcoin and its rival digital currencies.

This move echoes the South Korea's announcement that it plans to ban cryptocurrency trading, and China's ban on initial coin offerings (ICOs) — both events caused crashes in this volatile market.

However, South Korean officials later clarified that an outright ban was only one of the steps being considered.

Then on Wednesday, its finance minister Kim Dong-yeon confirmed his government has no plans to implement a crackdown as severe as China's.

"There is no intention to ban or suppress cryptocurrency market," Mr Kim said.

Facebook advertising ban

The sell-off began with the hacking of Japan's largest digital currency exchange Coincheck last week, which resulted in 58 billion yen ($660 million) worth of cryptocurrency being stolen.

Coincheck has agreed to repay 46.3 billion yen ($523 million) to investors.

Investors continued to sell their crypto- holdings as Facebook announced its ban on cryptocurrency advertising mid-week.

Facebook's new policy states that advertising cannot promote financial products and services that are "frequently associated with misleading or deceptive promotional practices".

Examples provided by Facebook include "binary options, initial coin offerings, or cryptocurrency".

Over the next few weeks, Facebook will be pulling advertisements which violate this "intentionally broad" prohibition.

Some stakeholders like cryptocurrency exchange bitcoin.com.au have supported this move.

"Facebook's decision to ban cryptocurrency advertisements is a justifiable reaction to deceitful advertisers using the platform to manipulate unsuspecting investors," a spokesperson from the exchange said.

"This is a case where the widely publicised actions of a minority have affected the reputation of the majority."

On the other hand, digital marketing consultant Adriana Belotti believes this new policy is so broad that it will affect legitimate businesses who are not out to mislead or deceive.

Ms Belotti, who manages marketing campaigns for ICOs, said: "Advertising budgets will now be directed to other channels."

"I'll reconsider investing any time whatsoever in building an audience on a channel that won't allow me to leverage it."