This article is more than 5 years old.
Bitcoin has taken a turn for the worse this week, falling sharply as the cryptocurrency sell-off that has gripped market for months resumes in force—putting to bed hopes that the worst of the so-called crypto winter bear market is over.
The bitcoin price has lost some 6% since the weekend, with ethereum down by 11% and ripple, a common name for the XRP digital token, off by 10% over the same period, according to the latest prices on CoinMarketCap, which tracks most major cryptocurrencies.
Tether, a so-called stablecoin pegged to the U.S. dollar, has meanwhile climbed into the top five major cryptocurrencies by market capitalization, now worth a little over $2 billion, as other top 10 coins slide.
Getty
The renewed bitcoin sell-off, which has seen the bitcoin price fall as low as $3,322 in the last 24 hours on the Luxembourg-based Bitstamp exchange, comes as big banks and major financial institutions repeat stark warnings over the future of cryptocurrencies—and the latest data suggests more pain to comefor bitcoin, ripple (XRP), and ethereum.
Some$400 billion in value has been wiped from the cryptocurrencymarket over the past 12 months as adoption stalls and banks put closely-watched plans to wade into bitcoin and cryptocurrencies on hold.
The GTI VERA Convergence Divergence Technical Indicator shows bitcoin has now entered a new selling trend for the first time since mid-November, it was yesterday reported by financial newswire Bloomberg.
Analysis shows the last time the technical indicator sent asell signal bitcoin dropped sharply, from around $6,300 per coin to $3,100, in just two weeks.
“The crypto space was shocked yesterday afternoon to see the stablecoin known as tether take 4th place in the market cap rankings,”Mati Greenspan, senior market analyst at broker eToro wrote in a note to clients.
“The market cap metric is not a great way to measure the value of crypto-assets but seeing tether rising up the ranks so quickly can be a very telling sign of investor sentiment. Generally speaking, if traders are fearful of volatility in the crypto market and want to reduce exposure, the default option at many exchanges is to hold the money in tether.
“Traders are taking their foot off the gas for a bit. Short positions on bitcoin have come down pretty drastically over the last two months whereas long positions haven’t increased by much.”
Meanwhile, U.S. banking giant and long-time bitcoin and cryptocurrency skepticJ.P. Morgan last week warned those buying bitcoin to diversify from stocks and other assets may want to reconsider.
CoinDesk
Bitcoin’s epic 2017 bull run, which saw the bitcoin price climb from under $1,000 to almost $20,000 in less than 12 months, was largely put down to expectations institutional investment and big bank support for bitcoin would soon arrive.
As 2018 dragged on and that investment failed to appear many investors and traders got cold feet, bailing out of their bitcoin and cryptocurrency positions.
“We have long been skeptical of cryptocurrencies’ value in most environments other than a dystopian one characterized by a loss of faith in all major reserve assets,” J.P. Morgan managing director and analyst Jan Loeys wrote in a note to clientslast week.
“Even in extreme scenarios such as a recession or financial crises, there are more liquid and less complicated instruments for transacting, investing and hedging.”
J.P. Morgan’s latest warning adds to an avalanche of criticism leveled at bitcoin and cryptocurrencies from the traditional financial services sector over the last few weeks.
Last weekHuw van Steenis, senior adviser to Bank of England (BoE) governor Mark Carney, warned bitcoin, as well as other major cryptocurrencies, “fail the basic tests of financial services.”
“I’m not so worried about cryptocurrencies,”Van Steenis toldBloomberg Televisionin aninterview from the World Economic Forum in Davos. “[Bitcoin and cryptocurrencies] fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower.”
Earlier this month the Bank of International Settlements (BIS), which serves as a lender to country’s central banks, found most countriesregard bitcoin and cryptocurrencies as a niche technology and not the future of money that many crypto enthusiasts believe it to be.
“No central banks reported any significant or wider public use of cryptocurrencies for either domestic or cross-border payments in their jurisdictions,”the BIS report found.”Usage of cryptocurrencies is assessed to be either minimal (‘trivial/no use’) or concentrated in niche groups.”
CoinMarketCap
However, it’s not all bad news for bitcoin, ethereum, ripple (XRP) and other major cryptocurrencies, with some pointing tobitcoin’s growing transaction rate as a cause for celebration.
“Despite the recent bear market, there are some extremely clear signs that the crypto industry is thriving. Last week we highlighted bitcoin’s transaction rate, which has been growing steadily over the last year,” Greenspan added.
Get the best of Forbesto your inbox with the latest insights from experts across the globe.
Follow me onTwitter.
Billy Bambrough
I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com.Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.
Read MoreRead LessEditorial StandardsCorrectionsReprints & Permissions
Loading ...
