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It’s been a pretty dark week for the cryptocurrency market. Bitcoin just dropped with $1,300 in 1.5 hours. Other cryptos, such as Ethereum, Ripple and almost all other alt coins are plunging with lightning speed this week.
Bitcoin is currently trading at around $11,000, which is a major blow to the value of the “people’s currency”. The regulatory issues raised by South Korea over the cryptocurrency “heat” has had its effect on the price of Bitcoin. Analysts believed that the price of the Bitcoin would stabilize to $15,000, but this prediction did not prove to be true.
Bitcoin opened today at $13,500 and reached a daily high of around $13,600 before hitting a daily low of $11,850. That means that Bitcoin’s value plunged with more than $1,300 in under 2 hours. The fall of around 20% in value for just one day is keeping investors on the edge, as the other top cryptocurrencies by market value are not seeing a brighter day, either.
Ethereum is down with 14%, Ripple has plunged 21% and even Bitcoin Cash with 19% for just 24 hours. This means that the current market cap of the cryptos is $584 billion, and on January 7th, the market cap was at $832 billion.
Some of the reasons for the cryptocurrency “bloodbath” are known to many crypto players. One is the recent regulatory warnings issued by South Korea. The government expressed their intention to stop the cryptocurrency trading in the country, while freezing accounts and working with major financial institutions to stop the crypto “heat”. Business Insider reported that one of the analysts at the trading platform eToro said that “the declining volumes from Japan and South Korea appeared to be behind Tuesday morning’s sell-off”.
That seems logical, since investors in South Korea and Japan seem tired of overpaying for cryptos, as again reported by Business Insider.
Another reason may be the fact that China, while it banned cryptocurrency trading within the country, the government is now trying to ban mining. As we all know, the biggest Bitcoin mining farms are located in China. Their eventual decision to ban mining farms can trigger a massive sell-off of cryptos, which will exacerbate the current situation.
Quoting from Business Insider and Neil Wilson, a senior analyst at ETX Capital:
“China is said to be targeting websites and mobile apps that offer exchange-like services, in a bid to block access to platforms that deliver centralised trading on cryptocurrencies. In addition to developments in China, South Korean Finance Minister Kim Dong-yeon reiterated on Tuesday that the government is actively considering an outright ban on crypto trading.”
The biggest issue with cryptocurrencies is the fact that they are facing a huge regulatory push from governments around the world. The countries coming at cryptos like Bitcoin and Ethereum are the most powerful and with the most trading volumes such as China, South Korea and Japan. In addition, the issue with taxes and the decentralization that blockchain offers may also be heating the tension and the fall in cryptos this week.
However, with the current ICOs that rely entirely on their tokens to return the investors’ money and trust, and with the power behind blockchain, the market value of the digital currencies market is not expected to fall to drastic levels. It is normal to see such a drop when a major country drops trading volumes with 30%, but investors should realize the value of digital currencies and their future use.