The global cryptocurrency market experienced huge declines in prices amid reports that India was ramping up the regulation on digital currencies. The huge selloff on Thursday was similar to market corrections that have been seen through the month of January. The only coin to come through Thursday’s cryptogedon unscathed in the top 100 was DigixDAO, according to data from CoinMarketCap. All other currencies experienced major losses with major coins such as Bitcoin, Stellar, Litecoin, and Cardano registering double-digit losses.
Bitcoin briefly went below $9,000, which was its lowest since November 2017. Ripple XRP, which has been the fastest growing cryptocoin in recent times, fell back below $1. In terms of total market capitalization, digital currencies sunk to a low of $53 billion. Bitcoin, which was previously experiencing phenomenal growth, has seen its market share drop to just 33%. Trade volumes on Thursday were around $26 billion, with Bitcoin accounting for 34% of that trade volume.
What Is Causing This Decline?
The latest market tumble has been blamed on uncertainty and controversy. Recent reports indicate that the Indian government are planning to impose new rules on digital currency trading. During a speech in parliament, the Finance Minister said that the government planned to impose measures that would restrict the use of digital currencies for illegal activities. Most mainstream media took this to mean that they planned to ban cryptocurrencies altogether. This was quite confusing for most, since India considers digital currencies illegitimate anyway.
Uncertainty over regulation continues to be a thorny issue for the digital currency markets. Just a month ago, this led to South Korea having one of the largest two-day sell-offs in the history of digital currencies. There is also a lot of anxiety in the market over reports that Bitfinex may have been artificially inflating the price of Bitcoin in recent months. The U.S. Commodity Futures Trading Commission (CFTC) subpoenaed the exchange along with Tether, which is owned by the executives of the exchange.
The case of Tether is interesting since it was allegedly backed by dollars. However, most analysts have cast doubt on such claims. Some have even suggested that Tether has been issuing new coins to inflate the price of Bitcoin so that they can deal with solvency issues.
In December, the price of Bitcoin hit a record of $20,000, which raised its market cap to $330 billion. Since then, its market cap has fallen by more than half. However, some analysts are still optimistic about the digital currency. They believe that this would be the best time to buy. Most medium-term forecasts show that BTC will likely continue to climb, although the road to that point will be rough.
For instance, Fundstrat, a market strategy firm predicted that the price of Bitcoin would be $25,000 by the end of the year. Other experts believe that the price of Bitcoin could be as high as $50,000 by December 2018.
What do you think about the latest price tumble in digital currencies? Leave us your thoughts in the comments section below.