Cryptocurrencies were seeing red early Tuesday, as the global crypto market fell by 10% within 24 hours, from US$218 billion to US$193 billion, as recorded by coinmarketcap.com. Bitcoin share price was leading the market lower when it dropped to US$6,000 early in yesterday’s trading. By 7:55pm Tuesday bitcoin had fallen by 3.4%, trading at just US$6,041.20, before it ultimately recouped much of that day’s loss.
Major cryptocurrencies seemed to follow bitcoin’s lead, as they too suffered dangerous drops in price in the same time period. But it was ethereum that saw the biggest drop in value, plummeting by nearly 20% to hit its lowest price in almost a year.
Here are six of the top 100 coins by capitalisation at the time of the crash:
- Litecoin, down 8.8% at US$51.55
- Stellar, down 8.6% to US$0.20
- Bitcoin cash, down 7.3% at US$492.75
- Ethereum, down 6.6% at US$264.97
- EOS, down 6.6% at US$4.33
- XRP, down 4.4% to US$0.26
Bitcoin share price and major Cryptocurrencies feeling the effects of delayed exchange-traded fund
Since late June the Crypto markets have been feeling pressure after US securities and Exchange Commissions delayed a decision on whether to approve a bitcoin exchange-traded fund. A move that bitcoin bulls believe would have significantly increased the volume of the market.
While reasoning’s for the global price crash experienced in the markets is hard to pin down to one single thing, massive trading volumes suggest there was a sell-off, which began Monday when ethereum fell to an 11-month low.
With many cryptocurrency analysts linking the latest market movements to the liquidation of funds raised through ICOs (initial coin offerings), meaning companies may be selling the ethereum raised through the popular fundraising mechanism.
The chief market strategist at FXTM, Hussein Sayed, showed concern for the future of the crypto markets, saying:
‘If an ETF doesn’t see the light in the coming weeks expect to see a further selloff, as it suggests regulators will continue to fight against bringing cryptocurrencies into the mainstream,’
He also claimed that a break below US$5,770 for bitcoin would ‘intensify selling pressure as it’s the only major support still standing.’
Neil Wilson, chief market analyst at Market.com, also said that the decline arrives as emerging-market currencies were selling off, which is on the back of being startled from last week’s collapse of the Turkish lira against Australian dollar.
He also said the occurrence ‘puts paid to the notion of cryptos as a safe haven play.’
‘Ultimately USD and US Treasury notes are the only real safe harbour,’ Wilson said.
Matthew Newton, an analyst at the online trading platform eToro, shared similar concerns:
‘The crypto market seems to have hit panic mode, with prices falling significantly across the board. As we can see in the case of ethereum, investors seem to be increasing liquidations of their ICO holdings, with significant drops in price and increased volumes,
‘This has had a knock-on effect on the rest of the [cryptocurrency] market, with bitcoin also momentarily dropping below $6,000 late last night. With prices hanging in the balance, emotions will be running high among traders. But keeping things in perspective, bitcoin is still range-bound for now between $5,700 to $8,000 in line with how it has traded over the past few months.’
One thing remains clear after the sudden global decline in cryptos. These markets are as dangerous as they are exciting. Their volatile nature doesn’t seem likely to let up, at least not until appropriate exchange-traded funds can be approved.
A bleak outlook for crypto shareholders
Crypto markets went through the wash yesterday, and it’s likely that many of the more-cautious investors could be looking to cut their losses and opt out of the troubling market. Cryptocurrency investors have been sharing the damning effects on various community forums, with many revealing the extent of their personal losses. Eiland Glover, CEO of crypto firm Kowala, said:
‘While your average trader on Reddit or in a family office may be taking a hit this month, the true sufferers are those who are seeing their life savings plummet yet have no trustworthy fiat alternative to turn to.’
But amid this panic, in highly stressful times, it would do well for investors to remember the financially liberating nature of this technology. Which Mr Glover described as ‘nothing short of a miracle for those in equally unstable economies, such as Venezuela and Turkey.’
For Money Morning
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