Spooked crypto investors unloaded $46bn (£34.3bn) worth of cryptocurrencies after the South Korean exchange platform Coinrail announced that it had been hacked over the weekend, prompting bitcoin to drop to a two-month low.
Bitcoin prices are currently at $6,757 according to Coindesk, down from around $7,200 earlier on Sunday, which brings this year's bitcoin recession to more than 50 per cent after analysts have had hopes that bitcoin would more than double in value by the end of the year.
The hack resulted in Coinrail losing around 30 per cent of the coins traded on the exchange and trading has now been suspended as the website is temporarily unavailable.
The company said in a statement that it was cooperating with the police and their investigation into the cyber attack which occurred yesterday.
The intrusion follows the hacking attack on the Japanese crypto exchange Coincheck in January in which hackers stole $500m worth of digital assets, making it one of the biggest robberies in history.
The cyber attacks put the spotlight on the need for financial regulation in the sector as cryptocurrencies have in the past been used for money laundering and other illegal activities.
George Zarya, chief executive of Sequant Capital, said that although regulation within cryptos has improved, there is still a way to go in a sector that many regard as a “wild west” and that monitoring of accounts with suspicious activity should be stepped up.
In January, bitcoin was forecast to reach $33,000 per coin by 2019, but after a tough start of the year for the world's most popular cryptocurrency, the estimate is now around $14,000.
The target is small in comparison to the price bitcoin reached while the crypto craze was booming in late last year when prices almost reached $20,000.
Matthew Newton, analyst at eToro, said: “The hack in South Korea may have fired the starting gun on yesterday’s price drop. But the major fall happened later on that afternoon, around 6pm BST, when there was a surge in volume as potentially a large sell order was dumped on the market.”
“Currently there is no indication of what caused this, but it certainly seems to have accelerated the drop.”