The US is trying to make its banks offer up to $2,000 in bitcoin.
The Federal Reserve’s decision to move to a two-month limit for deposits to the US was announced this week, following a push from the central bank’s two top leaders.
But the move, which was made last week, has caused a scramble on the bitcoin exchange market, as some US traders have started to sell their bitcoins to cover their deposits.
“This is the beginning of the end for the cryptocurrency industry as a whole, it’s going to end in a massive collapse,” said Bitcoin exchange operator Blockchain.it CEO Mark Karpeles.
He said the bitcoin market is “going to crash”.
“The people that are going to suffer are the people who are actually using the currency,” he said.
Mr Karpelsi said the move will make it harder for bitcoin users to access their money, as it is “a bit of a pain in the neck” to withdraw money from the market.
Bitcoin’s price has been on a rollercoaster ride since the announcement.
It hit a high of more than $4,000 on August 10.
On Monday, it was trading at $1,737.30, and then briefly traded as high as $1.738.60.
By Thursday, the price had fallen to $1 of a penny, and was now trading at around $1 worth of bitcoin.