Investing.com – Bitcoin retreated falling below $8,000 on Tuesday after the New York Attorney General Eric Schneiderman launched an investigation into 13 major cryptocurrency exchanges trading cryptocurrencies including bitcoin.
Bitcoin fell 1.38% to $7,880 on the Bitfinex exchange.
The probe into 13 major cryptocurrencies including Coinbase Inc., Gemini Trust Co. and BitFlyer USA was described as a “fact-finding inquiry,” as the New York Attorney General sought to establish how these exchange protect consumer assets.
“With cryptocurrency on the rise, consumers in New York and across the country have a right to transparency and accountability when they invest their money,” said Attorney General Schneiderman.
"Yet too often, consumers don’t have the basic facts they need to assess the fairness, integrity, and security of these trading platforms.”
The report came just hours before the end of “Tax Day,” in the U.S., - The April 17 U.S. tax filing deadline, which some market participants claimed contributed to the recent weakness in cryptocurrency as traders sold cryptos to fund tax liabilities.
The end of “Tax Day,” however, should ease downward pressure on cryptocurrencies, triggering a rebound, according to Spencer Bogart, partner at Blockchain Capital.
"Tax-selling has been a significant factor in downward crypto prices over the past few weeks. I would expect this downward pressure to abate after tax day," Spencer Bogart, partner at Blockchain Capital told CNBC on Monday.
Others, however, have pegged their hopes of a rally in bitcoin on fundamentals.
Founder and CEO of digital assets investment fund BKCM LLC, Brian Kelly, said that with a resurgence in bitcoin transaction volumes, the price of bitcoin could top its $20,000 level, setting a new all-time high of $25,000 by year-end.
“We need the fundamentals, which is the number of transactions, to catch up to this a bit. And if we see that, then I do think we’ve bottomed here and we’ve got a sustainable bull run ahead of us,” Kelly told CNBC.
Since the turn of the year, the bitcoin community has made huge strides to speed up transactions and lower fees on the Bitcoin network, further integrating solutions such as Segwit and Lightning Network.
This has driven the price of transactions fees on the Bitcoin network to about $1.15, well below the $55 transaction fees observed in late December 2017, according to BitInfocharts.com. The number of transactions on the Bitcoin network, however, at 160,000 per day, remain well below the nearly 500,000 transactions per day seen in December.
Proponents of bitcoin hope that popular digital currency's lower fees and faster transactions will eventually attract the attention of large merchants, paving the way for bitcoin to become a mainstream payment option.
Ripple XRP rose 0.20% to $0.65260 on the Poloniex exchange, while Ethereum fell 0.49% to $501.51.