Bitcoin rebound fizzles out

It has been a turbulent week for Bitcoin — and it's only Tuesday.

After the cryptocurrency suffered a flash crash on Saturday — plummeting some 14 per cent — it attempted to bounce back Monday.

But the rebound fizzled out quickly.

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Bitcoin fell 0.7 per cent against the US dollar around the time of the stock market close Monday, trading around US$56,000 ($72,188) per coin.

The weekend plunge was a rather dramatic end to a months-long rally that was topped off by Coinbase's enormous IPO last week, which valued the crypto exchange at nearly US$100 billion (approx. $128.9 billion).

Coinbase shares dropped 2.6 per cent on Monday.

Bitcoin had tumbled because of "some countries like Turkey making noise about banning Bitcoin as a payment methodology and also talk of further scrutiny by the US Treasury," Jefferies global head of FX Brad Bechtel said, addressing an unconfirmed Twitter rumour that is believed to have triggered the drop.

READ MORE: Bitcoin suffers flash crash following week of crypto hype

The crypto market is also getting more crowded: China is creating a digital yuan and is toying with the idea of rolling out the currency at the 2022 Beijing Winter Olympics.

Meanwhile, the Bank of England announced the creation of a Central Bank Digital Currency as well as a task force to explore its uses.

"Big Tech is also developing their own versions of cryptocurrencies," said analysts at Action Economics in a note to clients.

"All this represents significant future competition for the likes of bitcoin."

At the same time, the cryptocurrency still has plenty of bullish backers.

"We don't think any of these factors change the fundamental story for Bitcoin which still seems supported by constrained supply and broadening institutional and retail investor adoption," wrote Win Thin, global head of currency strategy at Brown Brothers Harriman, in a note.