Bitcoin is experiencing the worst week in months amid regulatory fears

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The digital currency, which has soared to all-time highs of around $ 42,000 in January, is now trading at $ 32,000 a penny as of Saturday afternoon. Photo: Getty

Bitcoin (BTC-USD) has suffered its worst week in months, dipping to less than $ 30,000 (£ 21,900), before recovering slightly, amid growing fears about tighter regulation.

The digital currency, which has soared to all-time highs of around $ 42,000 in January, is now trading at $ 32,000 a penny as of Saturday afternoon.

Earlier this month, the City’s watchdog warned consumers that they should be prepared to lose all their money if they invest in products that promise higher returns from virtual currencies like Bitcoin. The comment started on Bitcoin’s recent collapse of grace.

“The FCA is aware that some companies offer investments in cryptoassets, or lending or investments related to cryptoassets, which promise high returns,” said the regulator.

“Generally, investing in cryptoassets, or investments and borrowing associated with them, involves taking very high risks with investor money. If consumers invest in these types of products, they should be prepared to lose all their money. ”

This week, new US Treasury Secretary Janet Yellen expressed skepticism over Bitcoin, and concern has emerged about a “double-spending” phenomenon that would indicate a flaw in the cryptocurrency’s software.

The digital currency, which has soared to all-time highs of about $ 42,000 in January, is now trading at around $ 33,000 a penny as of Saturday afternoon.  Chart: Yahoo Finance
The digital currency, which has soared to all-time highs of about $ 42,000 in January, is now trading at around $ 33,000 a penny as of Saturday afternoon. Chart: Yahoo Finance

It comes after the combined value of all Bitcoin tickets in circulation reached half a trillion dollars for the first time ever last month, putting it ahead of Visa and making it the world’s largest financial service.

Bitcoin 2020 started at around $ 7,000 a penny. Despite its rise over the past year, the cryptocurrency remains highly volatile and experts remain skeptical about its use as an investment.

According to industry data, about 13% of all Bitcoin in the world, some $ 80bn out of $ 600bn, belongs to just over 100 individual accounts, the Telegraph reported. The top 40% of all Bitcoin, roughly $ 240bn, is held by just under 2,500 known accounts out of about 100m overall.

This has sparked fears that Bitcoin “whales” holding huge amounts of the cryptocurrency could crash the market, according to experts.

“Bitcoin’s trading market is very thin,” David Gerard of the crypto-skeptic told the newspaper. “There’s not a lot of volume available to trade. The big players can easily move the price.”

“And there are all sorts of trading shenanigans, which wouldn’t happen on a regulated market.”

READ MORE: Bitcoin resumes sliding after a short pause

However, there have been major moves towards mass adoption of digital currencies in recent months.

In October, PayPal (PYPL) announced that it would allow the cryptocurrencies on its platform.

The payment platform in California said that launching its new service would allow customers to buy, hold and sell cryptocurrency directly from their PayPal account.

US account holders will be able to deal in digital currencies, including Bitcoin, Ethereum, Bitcoin Cash and Litcoin in the coming weeks and plans to expand to Venmo and some countries in the first half of 2021.

Customers will be able to use their cryptocurrency holdings to pay for goods and services at 26 million PayPal merchants worldwide from early next year. However, traders will not accept virtual currency payments, with cryptocurrency payments being settled using fiat currency, such as US dollars, the company said.

PayPal has partnered with Paxos, a New York-based chartered trust firm, to provide cryptocurrency and securities trading services.

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