Investing.com – Bitcoin slumped on Monday after suffering a sharp intraday reversal as ongoing regulatory fears continued to stifle cryptocurrency demand, adding to downside momentum in the wider cryptocurrency market.
fell 4.69% to $6,661.9 on the Bitfinex exchange, after meeting stern resistance at Monday’s intraday high of $7,189.0. Following the sharp intraday reversal Monday, the popular digital currency looks set to test its Feb. 6 low of $6,000.
The UK’s Financial Conduct Authority (FCA) announced Monday that it is working with the Bank of England and the UK Treasury on a discussion paper for cryptocurrencies.
While cryptocurrencies fall outside the FCA’s regulatory purview, some fear the paper could pave the way for future regulation.
Fears of increased regulation come as the Reserve Bank of India last week ordered regulated entities to unwind their positions with individuals or business dealing in cryptocurrencies.
While the Spanish Treasury last week launched an investigation to crackdown on tax evading and money laundering crypto investors.
Others, meanwhile, cited the upcoming U.S. tax deadline as one of the headwinds forcing traders to sell their bitcoin holdings as they seek to raise funds to pay taxes on capital gains following the spectacular rise in the price of bitcoin seen last year.
Thomas Lee, head of research at Fundstrat Global Advisors said last week in a report that the upcoming April 17 tax filing deadline could lead to massive “selling” of bitcoin. U.S. households likely owe $25 billion in capital gains taxes for their cryptocurrency holdings, Lee added.
Demand for cryptocurrencies remained subdued as the slump on Monday saw the total cryptocurrency market cap resume its decline.
The total market cap of cryptocurrencies fell to about $256 billion at the time of writing.
fell 3.08% to $0.47979 on the Poloniex exchange, while fell 1.30% to $392.05.
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