Cryptocurrency Hit Record Low Values Over the Weekend

Over the weekend, cryptocurrencies suffered one of the most severe decreases in value in history when their market cap fell from a record high of $116 billion in June to $60 billion on Sunday July 17. Early this week, the market has started to rise again, but the plummet will not soon be forgotten: throughout the day on Sunday, Bitcoin dropped from over $2,000 to as low as $1,758.20, and Ether fell 20 percent to $130.26.

As of Tuesday morning, it seems the downward trend has ended, with all major cryptocurrencies reporting rising rates again: Bitcoin is back over $2,000 once more, with Coin Market Cap reporting the currency is now trading at $2,307 (9:00 EST), while Ether has risen from a low over the weekend to a current value of $196.58. The total market cap has regained losses of around $10 billion, according to Coindesk.

Despite the improvement, however, cryptocurrencies  are a long way off the meteoric successes they enjoyed in June, where they saw a market cap as high as $116 billion. Since then, Bitcoin has lost around 30 percent of its value, with its highpoint being $3,000 in contrast to today’s figure of roughly $2,000. Ethereum has suffered even more severely, dropping from $395 to $164. Despite these falls, 2017 remains a record breaking year for cryptocurrency overall.

There have been three main reasons for the 48 hour cryptocurrency flop.

First,the bitcoin ‘civil war’ that seems imminent as of August 1st when the Bitcoin improvement proposal 148 is set to activate. For one, the proposal concerns the possibility of increasing the cryptocurrency’s block size, (a decision which has divided miners and investors). At any rate, and regardless of the eventual decision, the uncertainty right now has caused many investors to liquidate their virtual assets.

Second, a flurry of startups have chosen to get out of the game after profitable rounds of investment derived from initial coin offerings (ICOs). Two particularly striking examples are EOS: after raising $200 million worth of Ether earlier this month, they have been offloading it to Bitfinex and TenX, which raised 200,000 ETH ($67 million at the time) in its token sale — 30 percent of which has already been sold. This contributes to uncertainty and danger in the marketplace, which can precipitate decreasing value.

Third, the presence of amateur sellers that the bitcoin market attracts through its fundamental lack of regulation and policing can have a multiplier effect on every market movement, namely through frantic, if not occasionally panicked, buying and selling practices.

While the ultimate success of cryptocurrencies remains speculative, one thing we know for sure after observing their activity over the last few days is that financial currencies remain volatile and prone to unpredictability.


This article originally appeared at: https://futurism.com/cryptocurrency-hit-record-low-values-over-the-weekend/.

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