The price was cut in half in just one month. Has the Bitcoin bubble really burst?

According to Reuters, on Wednesday, the price of Bitcoin fell 20% to below the $10,000 mark in the United States, while other cryptocurrencies also saw similar declines as investors worried that regulators might crack down on cryptocurrencies to curb speculation.

Bitcoin prices have fallen 30 percent since Tuesday, and while they stabilized in late U.S. trading Wednesday, they are still half the price they were at a record high of nearly $20,000 a month ago on Luxembourg exchange Bitstamp.

Prices of cryptocurrencies such as Ethereum and Ripple fell as media reports of possible bans on cryptocurrency trading in South Korea and China raised concerns about a broader regulatory crackdown on cryptocurrencies.

Charlie Hayter, CEO of CryptoCompare, a cryptocurrency interaction platform based in London, UK, pointed out: "Investors are very panicked in the cryptocurrency market. People are selling their cryptocurrencies and trying to get out of this market." Hayter himself owns cryptocurrencies.

“You have more regulatory uncertainty ... and the price of these cryptocurrencies going down causes the prices of other cryptocurrencies to plummet,” he said, referring to the collapse of some cryptocurrencies during bitcoin’s recent price plunge.

Bitcoin's price could halve again during the current sell-off, Citigroup analysts said on Wednesday, adding that a drop to a range of $5,605 to $5,673 "looks likely very quickly."

South Korea, Japan and China have all said they want to tighten regulation of cryptocurrencies, while officials in France and the United States have vowed to investigate them, raising concerns that global regulators will hasten efforts to coordinate on how to regulate them.

Officials are expected to discuss the rise of Bitcoin at the upcoming G20 summit in Argentina in March.

“Cryptocurrencies are likely to be suppressed ahead of the G20 summit in March, when policymakers are likely to discuss stricter regulations,” said Shuhei Fujise, chief analyst at Alt Design.

Reversal of fortune

The recent plunge in bitcoin and other cryptocurrencies is a stark departure from their dramatic rally in 2017, when mainstream investors jumped on the bandwagon and an explosion in so-called initial coin offerings (ICOs) further fueled demand for cryptocurrencies.

“Bitcoin is deciding whether cryptocurrencies are at a point where they are going to crash and burn,” said Steven Englander, head of research and strategy at global macro fund Rafiki Capital Management.

Bitcoin has also experienced sharp declines before.

Including this round of decline, Bitcoin has experienced nine rounds of decline since 2011. The most recent round of decline occurred from November 2014 to January 2015.

On Wednesday, U.S. time, as Bitcoin futures prices on the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) fell to contract lows, the price of Bitcoin fell to $9,222, the lowest level since December 1 last year.

The trigger for the latest round of Bitcoin decline was that South Korea's finance minister recently stated that banning cryptocurrency transactions is still a possible option, and the South Korean government plans to take a series of measures to combat the "irrational" cryptocurrency investment boom.

Separately, a senior official at the People’s Bank of China said the government should ban centralized trading of virtual currencies, while prohibiting individuals and companies from providing related services.

“My guess is that cryptocurrency holders are trying to decide whether to abandon Bitcoin because its limitations mean it will be replaced by something better, or bet that it can still thrive despite these flaws,” Englander said.

Bubble burst

While many observers say the recent declines suggest the cryptocurrency bubble has burst, those who support the emerging market say government regulation of cryptocurrencies is welcome and that price volatility is to be expected.

Christopher Keshian, founder of hedge fund $APEX Token, said: "The volatility of Bitcoin and other cryptocurrencies is expected and an important step in becoming a mature asset class. We expect this volatility to continue into 2018, but basically believe that Bitcoin is still in a bull market."

The price of Ethereum, the second-largest cryptocurrency by market value, has fallen 15% since Tuesday, according to cryptocurrency price tracking website CoinMarketCap.

The price of the third-largest cryptocurrency, Ripple, fell 18% over the past 24 hours to close at $1.03, compared with a high of $3.81 on Jan. 4.

“Bitcoin’s rally has created a mystique of a one-way trade, but pricing requires belief that it will always be in demand,” Englander wrote in a research note. “This is far from guaranteed given the existence of alternatives with better characteristics.”

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.