Bitcoin rally pauses at $16,000 amid threat of regulator clampdown

Bitcoin has rebounded after a pre-Christmas slump, despite clampdown plans over “bubble” fears.

On Wednesday it crossed the $16,000 mark again, after losing more than 30pc of its value in one day and plunging to lows of $12,000 last week.

The cryptocurrency began the year below $1,000 but saw a staggering rise, despite warnings of a bubble. It hit record highs earlier this month, when it reached just under $20,000, but five days later dropped to $10,000.

The rebound came as a surprise after Israel’s markets regulator said on Tuesday it would propose a ban on digital currencies trading on the Tel Aviv Stock Exchange.

The Christmas swing followed the launch of Bitcoin futures on two exchanges, including CME, the world’s largest. The move was expected to lend legitimacy to the currency, which is yet to be regulated by any official body.

Panicked investors were unable to cash out last week when one of the major exchange sites, Coinbase, temporarily halted transactions due to a spike in traffic on its website.

Copy of bitcoin price

Despite mainstream popularity and ease of access, officials across the world have made clear their concerns over Bitcoin and similar cryptocurrencies. Israel said earlier this week that cryptocurrency companies were not welcome on its stock exchange.

Bitcoin | Your essential guide

“If we have a company that their main business is digital currencies, we would not allow it,” said Shmuel Hauser, the chairman of the Israel Securities Authority on Tuesday.

“If already listed, its trading will be suspended.”

The Israeli regulator would need to hold a public hearing before stock exchange bylaws could be amended.

Bitcoin has now clawed back 50pc of its value following last week’s drop. But it still remains unclear what was behind the swing.

Analysts speculated that a combination of end-of-the-year profit-taking among investors as well as the introduction of rival cryptocurrency Bitcoin Cash may have been to blame.