The cryptocurrency market got a hard bolt as more than $6 billion of investors were wiped off in a single day. The rout was led by XRP and ethereum even as the market continued to fall.
According to data from Coinmarketcap.com, as of about 11:32 a.m. HK/SIN time on Friday, there was a drop of $6.72 billion in the market capitalizaiton of the total value of the cryptocurrencies of the world in just 24 hours. This unprecedented drop was preceded by another sharp fall a day ago with a sell-off across all cryptocurrencies which also had led to erosion of billions of dollars from the value of the cryptocurrencies within just a few hours.
XRP was the biggest looser of the lot as it dropped 7.9 per cent on Friday at around 39.13 cents compared to its value the day before. During the day, the currency touched as low as 37.89 cents. There was also a 7.4 per cent drop compared ot the value a day ago in the value of ethereum which dropped to about $191.07.
On the other hand, the volat6ile cryptocurrency bitcoin remained more or less stable with a drop of just 0.8 per cent at around $6,278.61.
Whether any specific event or incident caused the sell off on Thursday and Friday is not yet clear, but the drop was in line with the fall in conventional financial markets throughout the world.
In recent times, important financial institutions and major figures have opined negative remarks for cryptocurrencies.
“Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system,” the International Monetary Fund said in a recent report.
A fresh warning about digital coins was sounded by Nouriel Roubini, an economist who is also credited to have predicted the 2008 financial crisis and is a long-time cryptocurrency criticiser.
“Crypto is the mother or father of all scams and bubbles,” Roubini told the U.S. Senate Committee on Banking, Housing and Community Affairs at a hearing on Thursday.
There have been diverging views on the measures and the methods that should be adopted for controlling the growth of cryptocurrencies by governments and regulators across the world. While there are some countries tghat are striving to make themselves as hubs of cryptocurrencies, there are other countries that have imposed strict regulations on trading of digital currencies such as in China.
Proponents of cryptocurrency are hopeful that more and more mainstream institutional investors would start to recognize digital currencies as an alternative to conventional currencies and start investing. They are also hopeful that new financial products like bitcoin exchange-traded funds (ETFs) in the U.S. would also attract such institutions. But the ETFs have not been approved by the SEC, the US market regulator.
“I’m surprised people think bitcoin can never reach its old highs. We have to remember today that not even 50 million wallets that use crypto today, but there are four and a half billion Visa cards, so you know this is the early stage for crypto, I don’t think $12,000 will be a problem in the future,” Fundstrat’s Tom Lee said in a television interview last week.
(Adapted from CNBC.com)