Drops, drops, drops: weekly review
During this week, investors saw a major drop of most digital currencies and the loss of $50 billion of market capitalization. The same amount of money was lost by Facebook after the Cambridge Analytica scandal. Looks like that something has undermined the reputation of the sphere - and what could that be?
There are two possible explanations. One of the most negative events of the week was the hack of the South Korean digital currency exchange Coinrail. This hypothesis, however, has an obvious disadvantage: Coinrail is no Coincheck or Mt Gox when it comes to both the volume of operated assets and the size of the client base. Nevertheless, this incident has undoubtedly made some Asian investors less bullish than they were prior to the hack.
The second event which the media also connects to the price dynamics is the inquiries made by the United States Commodities Futures and Trading Commission to several exchange platforms - Bitstamp, Kraken, Coinbase and ItBit. When put together, the trade volume and client base of these establishments is much more influential than Coinrail.
Bitcoin has dropped to $6,388 yesterday. Since the latest clarifications from the United States Securities and Exchange Commission about its legal status, it has managed to restore some lost positions, but it didn’t surpass $7000 just yet.
Ethereum has also seen a local minimum value yesterday, the growth from $469 to $515 was likely caused by the same speech of the SEC’s Director of Corporate Finance William Hinman. One should not forget that last Friday, the same cryptocurrency cost over $600 and to minimize the losses of this week, it should return to this number.
Per usual, major altcoins have followed the general market trend, with one notable exception. Ethereum Classic has gained +25% on the news about its addition to Coinbase. As mentioned in the dedicated report, there is nothing new in these dynamics, although it looks strange for a classic market observer.
While everybody is writing about the downfall of the market, it is a perfect time to inquire: where was the last time we saw Bitcoin for $6K? While prices may go further downwards and confirm the words of professor Nouriel Roubini about “HODL nuts”, this may also be a good opportunity to buy, as recently implied by the management of Pantera Capital fund. One should note that the final decision is always taken by the investor and this market can be as dangerous as gambling.
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