Bitcoin tumbles to six-week low after report of DOJ manipulation probe

Bitcoin dipped Thursday after a report that the Justice Department has opened a criminal investigation into whether traders are manipulating the price of cryptocurrencies.

The price of the largest digital currency by market capitalization initially fell, before recovering and trading a touch higher on the day near $7,520, according to CoinDesk’s bitcoin price index.

Earlier, bitcoin dropped 3 percent to $7,272, its lowest since April 12. Bitcoin fell below $8,000 on Wednesday.

Early Thursday, Bloomberg reported that the Justice Department is investigating whether traders are using illegal market moves to trick others into buying or selling cryptocurrencies.

The Commodity Futures Trading Commission is also working on the probe, said the report, which cited sources.

The Justice Department and the CFTC declined to comment to CNBC.

“Long-term I think this is unequivocally positive for the growth of the space,” Ryan Schoen, senior financial services policy analyst at Washington Analysis, said in an email.

“Legitimate markets are constantly being policed for manipulation, spoofing, insider trading, etc. I don’t see any reason why crypto should be any different,” he said. “Big picture, there’s no way that institutional capital will enter this space in a meaningful way unless there are assurances that the market is not rigged.”

— CNBC’s Ryan Browne contributed to this report.

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