The cryptocurrency selloff in January took an interesting twist as the value of prominent digital currencies suffered a sharp dive. Speculations and news about regulatory ban and crackdowns have been swirling around from past few weeks. They have made a significant impact on the value of cryptocurrencies across the world. Though the virtual currency market gained a traction over the past year, it seems that the volatility in the prices may affect the investments in the industry. The prices at different exchanges in the world have suffered a major drop on Tuesday. The recent selloff showed that decline in the total market capitalization of cryptocurrencies was nearly $200 million. The market value at 7 a.m. London time on Tuesday was nearly $653.8 billion. It dropped to $450.5 billion by Tuesday evening, according to Coinmarketcap.com, a website which monitors the price of cryptocurrencies based on the prices across various exchanges.
According to the website, all top 20 cryptocurrencies suffered a major two-digit loss in 24-hour period. Bitcoin value dropped by 25 percent, Ripple by 24 percent, and Monero by 22 percent. In addition, many cryptocurrencies experience downfall by as much as 50 percent. However, Ethereum and Litecoin took a dive by 19 percent at the low point on the day.
The sudden drop in prices was attributed to uncertainties over Asian regulators. South Korea, which is one of the prominent markets for cryptocurrencies, announced that it is considering ban on cryptocurrency trading in exchanges. South Korean Finance Minister Kim Dong-yeon outlined the possibility of ban of cryptocurrency trading. He added that serious discussion among ministries is needed along with rational regulation.
“The entire market cap of cryptocurrencies saw a sell-off post the comments on crypto from the vice governor of the PBOC,” told Fernando Martinez, VP trader at Hong Kong-based commodities and digital assets trading house Octagon Strategy, to CNBC. “It was on top of the “additional negative sentiments from South Korea stating that tighter crypto-controls are still a possibility.”
According to a report by Bloomberg, Beijing has been considering a ban on access to Chinese and foreign platforms that provide centralized trading. Citing anonymous sources, it reported that China, a home to some biggest bitcoin miners, would target websites and mobile apps providing cryptocurrency services and block the access the in the country. The clampdown would affect the cryptocurrency prices across various exchanges considerably. The sources have not informed about the country’s plans and how those platforms are defined.
Commenting on bitcoin, in a Bloomberg TV interview in Hong Kong, Steven Maijoor, chairman of the European Securities and Markets Authority, said, investors “should be prepared to lose all their money” in Bitcoin. He added “It has an extremely volatile value, which undermines its use as a currency. It’s also not broadly accepted.”
Not only bitcoin but also other cryptocurrency values are dependent on what steps Asian regulators in countries such as China and South Korea would take in future. Amid all the speculations and announcements of regulatory crackdown, cryptocurrency value will definitely suffer.