Investing.com - Bitcoin appeared to fall out of favor with investors on Tuesday as the volume was turned up on warnings over cryptocurrencies in general, though digital rivals still seemed to garner interest as an alternative.
On the Bitfinex exchange, Bitcoin was down 7.02%, or $1,328.00, at $17,586.00 by 10:49AM ET (15:49GMT). The digital currency -that trades 24 hours a day, 7 days a week- continued to pull back from an all-time high of $19,891.00 reached on Sunday what is its third day of declines.
The downturn coincided despite the hype behind the fact that the Chicago Mercantile Exchange (CME) launched its own Bitcoin Futures on Sunday following rival CBOE’s own version just a week earlier.
The launch of futures trading has drawn a mixed reaction from investors, as it provides market participants with the option to place bearish bets on bitcoin, which could pressure the price of digital currency.
Other market participants believe, however, that the launch of futures paves the way for bitcoin to become an established asset class, which will eventually spur institutional demand.
Some traders suggested that recent declines were due more to profit-taking as investors sold on the actual launch of the CME futures contracts.
Despite three days of losses, Bitcoin, the largest digital currency with a market cap of $305.44 billion, still boasts year-to-date gains of more than 1,700%.
The stunning rally has long caused detractors to suggest that the cryptocurrency is in a “bubble” despite the fact that Bitcoin continued to break $1,000 dollar milestones all year long, passing from just below $1,000 at the end of 2017 to as high as nearly $20,000 last weekend.
Regulators have been keeping a close watch over cryptocurrencies as they are by-and-large unregulated. However, the move by exchanges to create derivatives based on the product has moved digital currencies into the cross-hairs on a global level.
The U.S. Securities and Exchange Commission (SEC) is keeping its eyes peeled and warned as recently as last week about investing in cryptocurrencies, saying trading and public offerings in the emerging asset class may be in violation of federal securities law.
"A number of concerns have been raised regarding the cryptocurrency and ICO (initial coin offering) markets, including that ... there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation," SEC chairman Jay Clayton warned.
Singapore's central bank joined the fray on Tuesday urging "extreme caution" about buying cryptocurrencies.
Specifically, the Monetary Authority of Singapore (MAS) said in an official statement on Tuesday it is "concerned that members of the public may be attracted to invest in cryptocurrencies, such as bitcoin, due to the recent escalation in their prices".
However, financial regulators are concerned about their capacity to regulate those digital currencies posing as “utility tokens”, instead of an actual “asset” that would fall under their jurisdiction.
A South Korean cryptocurrency exchange filed for bankruptcy on Tuesday after it was hacked for second time this year, highlighting concerns about security as trade in bitcoin and other virtual currencies boom.
The exchange, called Youbit, announced on its website Tuesday that it had been hacked, causing a loss worth 17% of its total assets, and announcing that all customers' cryptocurrency assets will be marked down to 75% of its value.
Separately, South Korea's Financial Supervisory Service (FSS) highlighted on Tuesday the difficulty of controlling those types of investment.
"All we can do is to warn people as we don't see virtual currencies as actual types of currency, meaning that we cannot step up regulation for now," FSS governor Choe Heung-sik said at a press conference.
Outside of regulators, the number of bitcoin detractors has been climbing almost as fast as the spreading fan base. A survey by Yale University’s Chief Executive Leadership Institute of 87 corporate leaders revealed that 88% felt that bitcoin was a “dangerous” bubble, predicting it “will not end well”, while 85% of those surveyed said cryptocurrencies are over-hyped and hazardous.
Despite the warnings, cryptocurrency mania remains on the rise with several of Bitcoin’s rivals showing higher returns than the largest digital currency by market cap.
While bitcoin underwent profit-taking on Tuesday, its largest rivals Ethereum and Bitcoin Cash seemed to benefit, gaining 3% and 5%, respectively.