Cryptocurrency Market Cap Plummets; Struggles To Recover
Having very briefly crept over into the $20k mark (USD) all but a week ago, Bitcoin’s price plummeted days later by as much as 45% to a lowly $11,159 on December 22. In fact, the world’s most popular cryptocurrency lost more than a quarter of its value on Friday, making it Bitcoin’s worst intraday drop in years.
Several days later however, the price has only marginally improved to $13,570. This underwhelming price recovery also occurred for all other major digital currencies such as Ethereum, Bitcoin Cash, Ripple, Litecoin, and Cardano,
As noted by the New York Post, “Bitcoin is known to go through wild swings. In November, it tumbled almost 30 percent in four days, from $7,888 to $5,555. In September, it fell 40 percent, from $4,979 to $2,972 [across two weeks].”
These declines were significant for their time, but they lacked in magnitude when compared to the recent sell-offs. You see, it was the damage inflicted to the total market cap that was worst of all. In under two days, over $200 billion disappeared from the near-$650 billion total market cap of all virtual currencies. For context, on September 15, the entire cryptocurrency market cap was only worth $99.8 billion, according to CoinMarketCap. At the time of writing, the total market cap has only marginally improved to $512 billion.
Barring some hiccups here and there, the whole cryptocurrency market has been on a dream run all year. This has seen many investors earn life-changing sums of money. With the expensive holiday season in full swing, many have perhaps viewed this as an apt opportunity to lock in profits by selling their position (or some of it), resulting in downward pressure on the price of the coin.
In speaking with Bloomberg recently, Marc Ostwald, global strategist at ADM Investor Services International, echoed this sentiment:
“With holidays approaching, some people want to step away from the table, and take their chips with them,” Ostwald said about the sell-off. “Still, I wouldn’t want to put it down too much to rationality, because this is not a rational market.”
A host of other reasons appear have to supplemented this perfect storm. For instance, the bankruptcy of the South Korean cryptocurrency exchange, Youbit, who’d been subject to multiple hacks in recent times, most likely from their cross-border rival in North Korea.
What’s more is that the head of the Danish central bank, Lars Rohde, issued a stark warning earlier this week, saying, “you should stay away (from Bitcoin). It is deadly.” She continued, “it is not a regulated market. It is not the responsibility of the authorities. It is the responsibility of the individual.”