The price of Bitcoin plunged by as much as 15pc on Sunday in the biggest slide for almost two months, just days after reaching a new record.
The cryptocurrency was trading at $53,991 after sinking as low as $51,707 earlier in the day – about $12,000 below record highs set on Wednesday. Ether, the second-largest token, dropped almost 18pc before paring losses.
Reports attributed the plunge to speculation the US Treasury may crack down on money laundering carried out through digital assets.
Data website CoinMarketCap cited a blackout in China’s Xinjiang region, which reportedly powers much Bitcoin mining, for the selloff.
Luke Sully of digital asset treasury specialist Ledgermatic said some “may have sold on the news of the power outage in China and not the impact it actually had on the network”.
“The power outage does expose a fundamental weakness: although the Bitcoin network is decentralised the mining of it is not,” he added.
Bitcoin hit a record high of $64,869 last week ahead of the debut trade for the cryptocurrency exchange Coinbase on the Nasdaq on Wednesday.
The cryptocurrency is valued at more than $1 trillion after an 800pc-plus surge in the past year. Growing mainstream acceptance of cryptocurrencies has spurred Bitcoin’s rally, as well as lifted other tokens to record highs.
Edward Moya, a market analyst at OANDA, said cryptocurrencies had been ripe for falls. “The market has become overly aggressive and bullish on everything. It could have been any bearish headline that could have triggered this reaction.”
Many cryptocurrency markets operate 24 hours day, setting the stage for price swings at unpredictable hours.