Cryptocurrency Slump Deepens, $78 Billion Wiped Off Since Saturday
Just when we thought we were coming out of it, the cryptocurrency market rout has extended for its fourth straight day now. Total market capitalisation now stands at $267 billion down from $345 billion on Saturday. That is a loss of about $78 billion in just four days. Bitcoin is trading at $6276 at 18.00H GMT, levels seen last in February in what was then one of the biggest losses.
The value of the market has now more than halved since January. Total market capitalisation for all cryptocurrencies peaked at $835.5 billion on January 8 barely a month before a devastating drop to $296 billion on February 6.
Two months later, on April 6, the market hit another new low of $248 billion after a prolonged downward trend largely over regulatory uncertainty and widening crackdowns on cryptocurrencies in several corners around the world.
A month later, on May 6, the market was back to $472 billion after a surprising resurgence. Since then, the graph has been facing down but the losses deepened further over the weekend.
So, what is responsible for this trend?
The trigger was taught to be the Monday hacking of CoinRail, a little know but nevertheless one of the most active exchanges in South Korea.
It reported a loss of 30% of its total assets mostly in less known PundiX tokens. There was no mention of any loss of major cryptocurrencies like bitcoin or ethereum.
Still, this is a relatively small attack that cannot possibly unleash such far reaching consequences.
Another investigation in the US over possible price manipulation reportedly touching major exchanges seems to have also scared investors.
Near all coins lost an average of 10% over the weekend, a pattern that has been repeated for the most part of this week. The sell off pressure somewhat eased on Tuesday only to resume a few hours later.
It is not clear whether this is a short term overreaction or whether it will persist. What is clear is that the market is still relatively small and dominated by small retail investors. Any small movement in prices or a big transaction can create far reaching ripple effects.