The global crypto currency market again dropped this week triggered by a fall in bitcoin. Since the beginning of the year, there has been a constant drop in the crypto value across various digital currencies.
The crypto currency fell to its lowest in over a year and dropped below the critical support level of $6,000. This resulted in a spurt in selling of bitcoin and this trend followed rthough in other crypto assets as well.
On the Bitstamp platform, bitcoin fell to as low as $5,533.09 and was recovered ot note a falloff 9 per cent at $5,690.47.
“For the last few days you could see the consolidation happening and the price was moving on the downside,” said Naeem Aslam, analyst at ThinkMarkets, a multi-asset online brokerage.
“The break of $6,200 yesterday gave a fair indication that there are no buyers on the sidelines at this point,” he added.
The second largest crypto currency ethereum dropped to a two month low – being affected by bitcoin’s weakness.
There was a 10 per cent drop in ethereum at $182.41.
And according to data from industry data tracker coinmarketcap.com, for the first time since mid-September, the combined market capitalization of crypto currencies dropped to below $200 billion because of the selloff across all the digital currencies.
“What you are seeing… is a breakout on the downside. Sometimes when things happen, it takes a while for the true reason to become clear – an exchange trade or regulatory action,” said Charlie Hayter, founder of industry website Cryptocompare in London.
But according to some other market participants, part responsibility of the volatility can be accorded to impending “hard fork” in bitcoin that would split bitcoin cash – which is another crypto currency that has been formed out of bitcoin – into two separate currencies.
A scheduled protocol upgrades, which include splitting its network takes place for bitcoin cash twice a year.
“For our trading activities, the hard fork recently has generated tremendous interest and trading volume, above 4 billion daily, among traders,” said Ricky Li, co-founder of crypto trading and advisory firm Altonomy.
On the overall, analysts believe that the outlook for bitcoin is still remains unclear because the conversion of the digital currency in to a viable payment mechanism is critical for it ot be considered for longer-term forecasts.
But in recent times, here have been clear signals of the acceptance of bitcoin as a mode of payment for by the greater financial world and large financial institutions. One such example is the increased demand for a bitcoin exchange traded fund and the increasing volume of bitcoin futures according to analysts. However, despite the positive signals, analysts have noted that the actual participation of both the institutional and retail investors us still low in crypto currencies.
(Adapted from VOANews.com)