Reasons behind dismal performance of cryptocurrencies in recent time

2018 has indeed been a bad year for cryptocurrency so far. Every single cryptocurrency has lost roughly 25% of its initial value since late last year after a terrible quarter one and two, that have seen bitcoin’s price plunge by more than 60%.

In December 2017 following the pinnacle of hype over the substitutes to traditional modes of transaction, Bitcoin’s worth reached a record high of $19,511. Today, the prices of Bitcoin have drooped substantially to as low as $6,315, bringing the downward curve of the year to more than 50% already. The cryptocurrency market saw Bitcoin dropping to its all-time low in February where the digital coin exchanged at $5,900.

On June 29th, Bitcoin fell dramatically dropping as low as $5,898 marking its lowest point this year. Other cryptocurrencies have also shared Bitcoin’s fate, the first quarter of the year has not been a bed of roses for them either as they too have witnessed significant price plunge since the onset of 2018.

In the last month, a major fragment of virtual currencies listed on CoinMarketCap has depreciated remarkably, save for Ethereum’s EOS, which managed to record a 2.4% market value increase recently.

NEO was among the worst performing digital currencies that recorded sharp declines in value in the last 30 days followed by Ethereum. Lesser known altcoins like Verge, Binance coin, and Ontology successfully defied currency dip, altcoins like NEM, Ethereum Classic, Dash, OmisegoGo recorded an average 30% market capitalization loss.

Why is Cryptocurrency Falling?

According to a recent CNN report, the recent plunge in the virtual currency market could have been triggered by a large-scale sell-off of Bitcoin that took place during the weekend.

The sudden sell-off took place on June 10, and because other virtual currencies tend to follow the trends of the most significant currency by market cap, Bitcoin, the result was an overnight depreciation of more than $20 billion in the entire virtual currency market.

Also, bitcoin and other virtual currencies witnessed a sharp drop since Coinrail, a South Korean virtual currency exchange, was hacked over the weekend.

The hack resulted in an estimated $40 million in virtual currency loss. Some experts believe the hack could not have led to the large-scale and worldwide depreciation in bitcoin and the entire virtual currency ecosystem, Coinrail accounts for only 5% of the whole cryptocurrency exchange in South Korea.

However, it may have contributed and played a role in the shedding of value rapidly over the weekend. The latest Coinrail cyber-attack underscores frail universal regulations and the lack of cybersecurity in virtual currency markets.

That Sunday’s cyber intrusion caused a loss of about 30% of the digital tokens traded on the exchange, Coinrail disclosed in a statement after the incident.

However, the statement went ahead to reassure traders and coin holders that:

“Two-thirds of the stolen cryptocurrencies were withdrawn or frozen in partnership with related exchanges and coin companies,”

Following the dwindling cryptocurrency prices, a couple of weeks ago, Bill Gates, Warren Buffet, and Jamie Dimon (JP Morgan CEO) expressed their pessimism about Bitcoin and cryptocurrencies as a whole again. Warren Buffet is quoted referring to Bitcoin as rat poison squared.

Currently, the virtual currency market is slightly recovering. Whether this upward trend across all digital currencies will continue in the succeeding months remains a mystery, given the volatility and unpredictability of the market.

Image courtesy of Pxhere