The prospect of a ban on cryptocurrency trading by South Korea, among the largest venues for cryptocurrency trading, was playing on the minds of traders and investors this morning as the price of bitcoin and other cryptocurrencies slid further. At 04:20 UTC, the price of a single bitcoin crashed to $12,884.91, down by 12% from 24 hours ago. That price also represented a fall of 34.5% from bitcoin’s high approximately a month ago. 

At 13:14 UTC, the price of a single bitcoin was $13,799.88, down 7.3% from 24 hours ago. Among the top 10 most traded cryptocurrencies, ethereum - which has gained 10% in a rally since Saturday - was the biggest loser. 

As of this writing, it was trading at $1,207.05, down 11% from its price 24 hours ago. Bitcoin Cash and IOTA, which rose by 2.87% and 5.15% from 24 hours ago, were exceptions to the fall in cryptocurrency prices. At 15:34 UTC, the overall market capitalization for cryptocurrencies was $679.7 billion, down from a high of $740 billion at 00:32 UTC. 

South Korea’s Crackdown: Why It Matters  

Cryptocurrency trading in South Korea has come under the scanner after reports highlighted the “kimchi premium,” or the higher price for cryptocurrencies paid by investors in the country. (See also: Why South Korean Bitcoin Price Is $1,000 Over Global Prices.) 

Law enforcement agencies also began investigating the country’s largest exchanges for tax evasion after national media highlighted cases of investors who have made millions in profits from cryptocurrency trading. This morning, South Korea’s Justice Minister Park Sang-Ki likened cryptocurrency trading to gambling and speculation. "There are great concerns regarding virtual currencies and justice ministry is basically preparing a bill to ban cryptocurrency trading through exchanges," he said. (See also: South Korea May Tax Cryptocurrency Trades.) 

The country’s Bithumb exchange is the second-largest trading venue for cryptocurrencies after Hong Kong-based Binance, as of this writing. In recent times, Ripple and Ethereum owe their price increases to a surge in trading at Bithumb. Not surprisingly, their prices slid immediately after the minister’s comments. The South Korean won accounts for 10 percent of all trading activity in ethereum and 5 percent in bitcoin.  

That said, increased regulation or even an outright ban might not deter enthusiasts. China effected a similar ban last year but it has done little to tamp down trading activity in the country. Exchanges have moved to places like Hong Kong/Tokyo to service demand from investors in the country. Besides, regulation might also help legalize cryptocurrencies and bring more investors, including institutional players, into its fold.     

The Three Buckets For Cryptocurrencies 

Legendary investor Warren Buffett, who is a famous bitcoin bear, reiterated his stance yesterday claiming that cryptocurrencies would come “to a bad ending.” (See more: Buffett: Cryptocurrency Will Come to a Bad End.)

Aswath Damodaran, an NYU professor who is also popularly known as the dean of valuation, brought some nuance to that debate in a CNBC interview yesterday evening. “Every single crypto-asset is being priced right now; its not being valued,” he said.

According to Damodaran, cryptocurrencies can be divided into three buckets: cryptocurrencies, commodities, and cryptoassets. Some of these assets might succeed while others might not. “So I think putting them in a bucket and throwing them over the edge doesn’t make sense,” he said. (See also: Dean of Valuation Believes Cryptocurrencies Are Replacing Gold.) 

Investing in cryptocurrencies and other Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns small amounts of bitcoin. It is unclear whether he owns other bitcoin forks.

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