After crossing a record-high valuation of $5,000 per coin on September 2, the price of Bitcoin fell by up to 20 percent this week. By Thursday, however, the crypto currency regained value and was trading at $4,600.
The fall in value has recently been reported across all the top 10 cryptocurrencies like Thererum, Ripple, Litecoin and Monero. This has resulted in speculations about the prospects of cryptocurrencies, besides a loss of up to $30 billion in the crypto market.
Bitcoin was valued at $1,000 in the beginning and it saw a 400 percent increase before settling at $5,0000 last week. The value of Ethereum exploded from just $8 in January to a peak of $400.
Read more: Bitcoin Is Now Worth More Than $4,000
Factors that led to the rise in Bitcoin prices have included legalization of the cryptocurrency in Japan; improvements in network capacity and transaction efficiency of the digital currency; and startups raising funding through a new method called the initial coin offerings (ICOs). The method has been well-received by companies since it allows them to raise funds while avoiding government regulations.
Some experts had forecasted that the price bubble would burst and prices would come crashing down.
Prices began falling when owners of cryptocurrencies began selling their investments in order to take advantage of the record-high prices. The downturn continued when ICOs came to the attention of regulators in countries like China where it has now been classified as an unauthorized and illegal fund raising activity.
Organizations and individuals in China who had raised hundreds of millions of dollars through ICOs have been asked to return these funds in order to protect interests of investors.