Bitcoin prices booked a sharp drop today after rallying earlier this week on reports Russia is looking to regulate the digital currency - and one analyst has warned prices could fall even further.
The cryptocurrency was trading around $1,225 after Russia, which used to be one of the strongest opponents to bitcoin, said it was seeking to regulate the digital currency.
However, the price of bitcoin tumbled to around $1,174 earlier today before recovering somewhat to where it sits now, down 2.09 per cent at $1,191.08, according to CoinDesk's index.
Senior market analyst at eToro, Mati Greenspan, said the sharp drop was a response to two factors.
"Firstly, other digital currencies are seeing significant gains, often 20-30 per cent in a single day, this is likely draining capital from bitcoin as cryptocurrency investors search for gains elsewhere.
"Secondly, the price of bitcoin is nearing an all-time high, which often creates resistance in the markets."
And Greenspan said the price could drop even further.
It wouldn’t be surprising to see the price move back to around $1,000.
Russian deputy finance minister Alexey Moiseev told Bloomberg in an interview earlier this week the Russian authorities are hoping to use the cryptocurrency to tackle money laundering.
Japan recently made bitcoin a legal method of payment, which was a big step in making the cryptocurrency more mainstream.
However, the digital currency still faces barriers to institutional adoption, with huge price volatility and scepticism from regulators stemming from bitcoin’s central role behind online black market payments.