Cryptocurrencies collapse after report Goldman is rolling back trading desk plans

  • Bitcoin has lost $1,000 in the past 48 hours.
  • The digital currency continued its downward slide on Thursday, following a report that Goldman Sachs is scratching plans for a cryptocurrency trading desk.
  • The price of ethereum had fallen by 13 percent in 24 hours, while Ripple's XRP token had seen its value dive by 6 percent and bitcoin cash dropped by 12 percent during that time.
A visual representation of the digital Cryptocurrency, Bitcoin, is seen on September 04 2018 in Hong Kong, Hong Kong.
Yu Chun Christopher Wong | S3studio | Getty Images
A visual representation of the digital Cryptocurrency, Bitcoin, is seen on September 04 2018 in Hong Kong, Hong Kong.

The cryptocurrency rally is on hold, at least for this week.

Bitcoin prices continued their sell-off early Thursday, following a report that Goldman Sachs was dropping its plans for opening a trading desk for cryptocurrencies.

The world's largest digital currency fell about 10 percent to a low of $6,279.08 as of 12:15 p.m. ET, according to data from CoinDesk. Bitcoin has lost roughly $1,000 of its value in the past 48 hours.

The price of other cryptocurrencies also plunged, according to industry tracking site CoinMarketCap.com. The price of ether fell 13 percent, XRP was down by 6 percent, and bitcoin cash dropped by 12 percent over a 24-hour period.

Digital currencies often move in lockstep with bitcoin, which accounts for more than half of the digital currency market.

Those prices began slipping Wednesday following a Business Insider report, which cited people familiar with the issue saying Goldman Sachs was pulling plans to launch cryptocurrency trading, and continues to see uncertainty in the regulatory landscape. In October of 2017, the Wall Street giant had said it was looking into the possibility of launching a new trading operation focused on bitcoin and other digital currencies. In October of 2017, Lloyd Blankfein, Goldman Sachs' outgoing CEO, had tweeted that the bank was "still thinking about bitcoin."

"Once the market sees Goldman stepping back and being patient, it starts to wonder 'what does Goldman know that I don't know'?" said Kyle Chapman, an analyst at venture capital firm Cosimo Ventures. "The market has trepidation about impending regulatory decisions."

More bearish news for cryptocurrencies came late last month when the U.S. Securities and Exchange Commission once again rejected proposals for a bitcoin exchange-traded fund as it continued to voice concern over fraud and possible manipulation in bitcoin markets. In bids to attract institutional investors, multiple groups have attempted to obtain SEC approval for cryptocurrency-focused exchange-traded funds.

Part of bitcoin's appeal has been its anonymity. But that use case is also coming under fire. This week, industry veteran and Erik Vorhee announced that his cryptocurrency exchange ShapeShift would begin requiring customers to share personal information.

Rumors on Reddit of a bitcoin "whale" moving $1 billion worth of the cryptocurrency added to fears. One person with a massive holding of bitcoin deciding to sell could theoretically rock the markets.

"In these cases, perception can be worse than reality," said eToro senior market analyst Mati Greenspan. "Bitcoin's volumes across global crypto exchanges are now firmly above $6 billion per day, so even if this pirate whale decides to breach, it probably wouldn't make much of a splash."

Still, Greenspan pointed out that this week's price moves are actually "quite normal" for crypto assets, which have been marked by volatility since nearing a high of $20,000 in December, according to CoinDesk.

"In fact, if anything, the crypto markets remain stable as ever," Greenspan said.

Prices had been relatively steady through August, hovering around the $7,000 range after dipping below $8,000 in July. The cryptocurrency has lost more than half its value this year but is still up 37 percent from a year ago. The cumulative market cap for all cryptocurrencies expressed in U.S. dollars has plunged approximately 70 percent since the beginning of 2018, according to data from CoinMarketCap.com.

European finance ministers are set to discuss the future of virtual currencies on Friday, September 7 at an informal meeting in Vienna. Topics of discussion include "opportunities and the risks involved" and "possible regulation of this global phenomenon," according to the Economic and Financial Affairs Council website.