The crypto currency market is continuing to develop a downward trend and seems to be unable to shake off the consistent spiral to ever new lows. What is worrying about this decline for investors is the fact that the declines are coming across the board and no currency seem to be immune from the decline. After a severe crash on Friday afternoon where almost all currencies declined by between 20 and 30% there was a mild recovery on Saturday with the market cap gaining some $30 billion although that recovery was short lived with everything declining again on Sunday to new lows for 2018 in the case of Ripple, Dash and Ethereum Classic.
At present, the only bright spot in all this carnage was Litecoin which managed to gain around 10% in the past few hours although it is still stuck at around the $140 mark. It had previously reached a high of $160 on Saturday as the news that the currency was being accepted as an alternative to Bitcoin seemed to kick start the market. However, as with other mini rallies, this recovery seemed to be short lived and Litecoin lost another 5-7% on Sunday when low volumes dragged the market down persistently.
Bitcoin seems to be the currency that is suffering most from a news point of view but once again, it was Ripple which posted the strongest declines. After a massive crash on Friday where the price descended to around $0.65, there was a steep climb on Saturday where the price even toyed with the $1 mark but on Sunday there was a steep decline once again with the price dropping to below the $0.80 mark and seemingly posed for further declines over the coming week. There have been several positive developments regarding Ripple in the past few days so it does not seem to correlate with the present performance of the currency overall.
The other less publicised currencies such as Dash and Bitcoin Cash also posted steep declines across the weekend after their mini recovery on Saturday. The former is once again trading at around $530 have touched $610 on Saturday while Bitcoin Cash has descended to below the $1100 mark after having exceeded the $1200 level on Saturday. Ethereum also declined considerably from highs of almost $1000 on Saturday and is now trading at close to the $800 mark yet again.
The market has faced a number of headwinds in recent weeks. Korea finally decided on banning anonymous trading at the end of January, after months of speculation that it was set to ban cryptocurrency trading and perhaps even digital currencies themselves. The Korean decision was a relief to many investors, as it constitutes the third largest market in the world. However this decision has not had much of an effect on the prices of crypto currencies which continue descending at an almost alarming rate.
Only two days ago, Indian Finance Minister Arun Jaitley outlined the government’s position on cryptocurrencies, refusing to accept them as legitimate means of paying for goods and services or as legal tender. The Government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities or as part of the payments system.
On January 26th it was reported that the Tokyo-based exchange Coincheck had been hacked, with $530 million worth of NEM stolen. To the dismay of many, Coincheck admitted it failed to lock away most of its deposits in cold wallets, citing difficulties in doing so. It also failed to implement NEM’s multi signature smart contract system, an additional layer of security. The hack was the largest in cryptocurrency history and its ramifications are being keenly felt.
On January 18th, CBOE’s first Bitcoin futures contracts settled at $10,900, with bears winning handsomely. The price of Bitcoin tumbled with the news. With futures contracts becoming the first opportunity to short cryptocurrencies, many worried the new financial instruments and Wall Street would have a negative impact on the market, with retail investors whiplashed around by market forces they barely understood, let alone being equipped to compete with them.
January has been a bearish month for cryptocurrencies every year since 2015. Many attribute that pattern to Asian market sell-offs with investors cashing out for Lunar New Year.