Bitcoin fell below the $8,000 level following a two-week sell off on Wednesday—its lowest level since mid April.
According to data from ConDesk, bitcoin dropped 8.7% to $7,525.11 as of 12:30 a.m PHT.
All other major cryptocurrencies also suffered a decline in prices despite bullish predictions that prices would increase following the much-hyped Blockchain Week in New York City.
Celebrated bitcoin bull and Fundstrat head of research Tom Lee predicted that bitcoin would rally as much 69% following “Blockchain Week,” and yet bitcoin has declined to more than 9% ever since.
Several experts claim this week’s sell-off was triggered by news of increased regulation in the market.
On Moday, U.S and Canada regulators, led by the North American Securities Administrators Association, announced an extensive crackdown on certain cryptocurrency investment schemes. Over 40 state and provincial watchdogs participate in what is touted as “Operation Crypto-Sweep,” which has prompted around 70 investigations so far.
“This cleaned out a lot of the bad projects,” Brian Kelly, founder and CEO of BKCM said. “That has people a little concerned, and is a short-term hit to sentiment,” he added.
Kelly, who runs the digital currency investment firm, said it’s part of the maturation that the crypto market needs for institutional investors to buy in in the long term.
“The projects that they shut down they appear to be junk, they had a real reason to shut them down,” Kelly said.
Compared to stock markets, Kelly said the growing cryptocurrency market usually takes a few days to digest news before it prompts a sell-off.
This week’s crackdown comes during a time when increased attention is given by the U.S. regulators to cryptocurrency scams in the U.S. The Securities and Exchange Commission has filed a number of cases against operators of initial coin offerings (ICOs) and has even launched a website to help educate investors against crypto scams.
In total, bitcoin has lost almost 40% of its value this year, after a record breaking 1,300% rise to almost $20,000 towards the end of 2017.
Jack Tatar, co-author of “Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond,” predicts this sell-off could indicate that a shakeout is coming for digital currencies.
“I think you’re going to start to see some consolidation around many of the smaller cryptoassets,” Tatar said. “That may not be a bad thing for the overall crypto community as I’m seeing more critical examination of altcoins, their utility and overall value.”