Bitcoin temporarily fell below its $10,000 milestone on some tracking websites while Ethereum fell below $1,000 in a further sign of volatility both coins did recover a small amount of their value.
UK Managing Director at eToro Iqbal Gandham said: “The market is correcting off the back of news that China is moving to crack down on cryptocurrency trading.
“Chinese investors are likely spooked having heard the news and the market is on edge as a result.”
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Chinese investors are thought to hold a huge amount of cryptocurrency magnifying the impact they can have on the value.
Bitcoin started yesterday comfortably on $13,251 before the decline began to strip its value and it ended the day on $11,123 after a mini recovery.
Etheruem started Monday at $1,292 after dipping from a record high of $1,316 before plummeting below $1,000.
Finance expert: Cryptocurrencies under threat from government
Chinese investors are likely spooked
Cryptocurrency tracker Coinbase had Bitcoin at a low of $9,969 a far cry from when it topped $19,800 in December.
The pattern was mirrored across several smaller coins, including Ripple, the third largest crypto, which dropped below $1.
South Korea has announced a curb on crypto futures and vowed the come down hard on any criminal activities involving illegal currencies.
Coinone and Bithumb, two of the country’s biggest exchanges, were raided last week.
The country, which had been a big player in the cryptocurrency boom, is now considering a full shutdown of all exchanges.
The government has also vowed to support research and development into the blockchain on which cryptocurrencies are based.
Last Wednesday, it was revealed by Justice Minister Park Sang-ki that the government was preparing a law to close all the nation’s exchanges.
Senior official Jung Ki-joon said: “We will respond strongly to cryptocurrency speculation and illegal acts, but we will provide support to research and development relating to blockchain technology.”
“The proposed shutdown of exchanges that the justice minister mentioned recently is one of the measures suggested by the justice ministry to curb speculation.
“A government-wide decision will be made after sufficient consultation and coordination of opinions.”
The South Korean government has twice moved to calm the volatile crypto boom which has swept the country.