The price of bitcoin slipped 10% in two days to fall below the $32,000 level for the first time since Jan. 11.

The total market value of all cryptocurrencies shed more than $100 billion in the last 48 ...hours.

The plunge comes after U.S. Treasury Secretary Janet Yellen warned about the illicit use of cryptocurrencies.

Bitcoin slumped for a second day Thursday, taking the digital currency’s losses to more than 10% over 48 hours and wiping off billions of dollars from the crypto market.

The price of bitcoin slipped 8% on Thursday to as low as $31,007, falling below the $32,000 level for the first time since Jan. 11, according to data from industry website CoinDesk.

The world’s most valuable digital coin has had a wild few weeks, briefly hitting $41,940 earlier this month before sinking sharply the subsequent week. The reason for its latest move wasn’t immediately clear, but investors told CNBC it is likely a natural correction.

“Corrections are a natural part of any market and are especially natural in the bitcoin ecosystem,” Michael Sonnenshein, CEO of Grayscale Investments, told CNBC. “From 2016-2017, we experienced 6 corrections of approximately 30% or more on the way to new highs.”

Ether, the second-biggest crypto token by market value, was down almost 9% in the last 24 hours at a price of $1,182. The coin hit an all-time high of $1,439 on Tuesday, according to Coin Metrics data.

The total market value of all cryptocurrencies shed more than $100 billion in the last 48 hours, falling from about $1.07 trillion to $918 billion as of 11:45 a.m. ET.

https://www.cnbc.com/2021/01/21/bitcoin-btc-price-falls-wiping-off-100b-from-entire-crypto-market.htmlShow more >

Not just a legal technicality
Any money issuance is a form of debt for the central bank, so it must have a solid basis to avoid legal, financial and reputational risks for the institutions. Ultimately, it i...s about ensuring that a significant and potentially contentious innovation is in line with a central bank’s mandate. Otherwise, the door is opened to potential political and legal challenges.
Now, readers may be asking themselves: if issuing money is the most basic function for any central bank, why then is a digital form of money so different? The answer requires a detailed analysis of the functions and powers of each central bank, as well as the implications of different designs of digital instruments.
Building a case for digital currencies
To legally qualify as currency, a means of payment must be considered as such by the country’s laws and be denominated in its official monetary unit. A currency typically enjoys legal tender status, meaning debtors can pay their obligations by transferring it to creditors.
Therefore, legal tender status is usually only given to means of payment that can be easily received and used by the majority of the population. That is why banknotes and coins are the most common form of currency.
To use digital currencies, digital infrastructure—laptops, smartphones, connectivity—must first be in place. But governments cannot impose on their citizens to have it, so granting legal tender status to a central bank digital instrument might be challenging. Without the legal tender designation, achieving full currency status could be equally challenging. Still, many means of payments widely used in advanced economies are neither legal tender nor currency (e.g., commercial book money).
Uncharted waters?
Digital currencies can take different forms. Our analysis focuses on the legal implications of the main concepts being considered by various central banks. For instance, where it would be “account-based” or “token-based.” The first means digitalizing the balances currently held on accounts in a central banks’ books; while the second refers to designing a new digital token not connected to the existing accounts that commercial banks hold with a central bank.
From a legal perspective, the difference is between centuries-old traditions and uncharted waters. The first model is as old as central banking itself, having been developed in the early 17th century by the Exchange Bank of Amsterdam—considered the precursor of modern central banks. Its legal status under public and private law in most countries is well developed and understood. Digital tokens, in contrast, have a very short history and unclear legal status. Some central banks are allowed to issue any type of currency (which could include digital forms), while most (61 percent) are limited to only banknotes and coins.

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