All major crypto currencies passed through a pretty tough time this past week and it does not look like the situation is changing anytime soon. In fact Thursday was one of those major bloodbaths where cryptos such as Ripple, Bitcoin and Ethereum Classic dropped by around 10% each to record lows of about 50% from their all-time highs. The most volatile in this sense was Ripple which went down to the $1.60 level at one point only to recover to $2.15 before dropping back to $2 again. However the wild swings of the past days appear to be behind us now as some currencies drop by a few percentage points and then settle at that price for most of the trading day.
Ethereum settles at record high but loses some of its gains
By far the most successful currency in the past few days was Ethereum which rose to unprecedented levels of around $1300 on Wednesday. However the currency lost some of its gains over Thursday where it was trading at around $1200 and even dropped well below that to $1150 at one point. Analysts have observed that this crypto currency is looking to be one of the most innovative and has already been in use for several transactions with companies and innovative startups looking to its fast blockchain for improved efficiency.
Ripple announcement on partnership with Moneygram lifts prices – but not for long
After being in the news for a few days with negative implications, Ripple suddenly came out with an interesting announcement that Moneygram was to partner with it to test payment methods. This lifted the Ripple price by about 30% from an intraday low of around $1.60 to a high of $2.15 as investors digested this important announcement.
MoneyGram will integrate XRP through xRapid, Ripple’s on-demand liquidity product that provides financial institutions with real-time foreign exchange settlement.
“Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid,” said Alex Holmes, chief executive officer of MoneyGram. “We’re hopeful it will increase efficiency and improve services to MoneyGram’s customers.”
The news is significant for the San Francisco-based Ripple, which has convinced numerous financial institutions to trial its enterprise blockchain network (RippleNet) but has seen few of those firms adopt the XRP currency itself. Eventually this could have a long term positive impact on the price as more companies adopt the crypto currency.
Bad news for Bitcoin miners in China
The price of Bitcoin was hovering at around $13,500 on Thursday after the announcement that South Korea was looking to ban all crypto currency trading. Although this was later corrected by the country’s Foreign Ministry, the situation had a profoundly negative effect on the markets where large corrections took place. Bitcoin was obviously no exception and took a hard hit.
However more negative news could now affect the price of Bitcoin in the long term such as the rumours that China has begun to ban Bitcoin mining in a big way. This has invariably led to some panic selling on the Asian exchanges resulting in another dip for the price of the crypto currency from highs of $14200 during the day to lows of $13,200 at one point.
News reports have indicated that China is moving to restrict Bitcoin mining activity by cutting off electricity supplies to several miners.
According to Wu Jihan, CEO of the Chinese company Bitmain , his company is responsible for the production of around 70 percent of all bitcoin mining rigs currently in use. Bitmain also runs two of China’s largest bitcoin mining pools and is currently moving its regional headquarters to Singapore. It has also managed to set up its operations in the United States and Canada. Bitmain has also established a subsidiary in Switzerland, which a company spokesperson said was chosen because it is “one of the most progressive countries…with good legal stability”. Likewise, ViaBTC, the fourth largest pool is also eliminating its dependence on China by starting its mining operations in North America and Iceland.
Philip Gradwell, chief economist at Chinalysis Inc, a blockchain analysis firm, stated in an interview with the Wall Street Journal:
“If China really does switch off all the minters suddenly, there could be a very high level of disruption. It’s very hard to estimate back-of-the-envelope how big an impact would be.”
He also believes that bitcoin could be in trouble, at least for a few weeks, before the network would be able to readjust the rate of mining new coins. This further uncertainty will undoubtedly affect investor confidence in the short to medium term.