In December the digital currency nearly hit the $20,000 mark.
Even if such a ban fails to materialise, South Korea could still impose strict new regulations on the market. In addition, the company behind the cryptocurrency BitConnect announced on Tuesday that it was shutting down its lending and exchange services, possibly adding to the panic that had taken over the market. "People are selling to try and get the hell out of there", said Charles Hayter, founder of Cryptocompare, which owns cryptocurrencies.
Thomas Bertani, CEO of Eidoo, said: "The hypothesis of South Korea banning cryptocurrencies, more than a driving factor, is really just an excuse for the market to rest down for a little bit before continuing with its growth".
Analysts put the fall down to regulatory concerns in South Korea, China and now Russian Federation. "Officials are expected to debate the rise of bitcoin at the upcoming G20 summit in Argentina in March", writes Reuters. One bitcoin is now worth $9,700, less than half its peak value of $19,500 achieved just last month. "The increased knowledge will push the currency further thus achieving more in the year".
South Korea is considering shutting down all local virtual currency exchanges, the country's finance regulator chief said Thursday.
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"You have to think of what the general trajectory is and the general trajectory is upward for cryptocurrencies and bitcoin", said Eyal. At the top of the selloff, the total cryptocurrency market capitalization plunged to $450 billion, sharply lower from an all-time high of above $800 billion.
Bitcoin is notoriously volatile, and it has suffered huge declines before.
In the past 24 hours, ETH is down 22.5 percent to around $850, Ripple is down 26.3 percent to $1.03, and so on.
The price of bitcoin fell Wednesday under $10,000 for a bitcoin on Wednesday, a level not seen since early December.