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Not long ago, the entire cryptocurrency market cap was approaching $1 trillion, but this bearish trend has turned the tides in reverse. At the time of writing, cryptocurrency market cap is at $327 billion with Bitcoin trading at $6,900 – representing a single-day pullback of nearly 13%.
And like always, all the cryptocurrencies have followed Bitcoin’s lead. The reason behind it is simple, most of the cryptocurrencies don’t have any dollar value. They all trade against Bitcoin. The USD value you see on Coinmarketcap is just the conversion of BTC to USD. So if Bitcoin goes down, other cryptocurrencies follow.
This bearish trend will likely continue throughout the week and BTC/USD pair could go down to $6,200. Below this, the fall can extend to the $5,450 levels.
So what has caused this catastrophic decline in prices? Well, there is a whole slew of bad news that has led to this downturn. Starting with Bitfinex, one of the largest exchanges in the world, getting tangled with the US Commodity Futures Trading Commission because they provide users an option to tether their currency to the American dollar. The suspicious thing about that is neither Bitfinex nor Tether can necessarily prove they have enough money in bank accounts to back up the USDT token.
Overseas, India is cracking down on traders to collect taxes on cryptocurrency gains. The Indian government is surveying transactions on multiple exchanges and has reportedly issued notices to high volume traders. Estimates hint that $3.5 billion in transactions has found its way through India in the last 17 months leading into 2018.
Then there is South Korea — a country that has no intention to ban cryptocurrency trading outright, but the government has taken steps to remove anonymity from the equation. South Koreans must now use their real names to trade on local exchanges.
On the other hand, The Dow Jones Industrial Average just hit a three-week low thanks to rising US government bond yields. It’s not just crypto market that’s feeling the burn these days.
So should you be worried? Historically speaking, no. Bitcoin and crypto market has crashed many times in the past. Although we haven’t seen a crash of this scale since 2013. Here are some numbers:
The December rally riding on Bitcoin Futures was astronomical. A lot of analysts were expecting a major correction. Few of them even predicting the price to as low as $6,000 before registering an all time high.
Looking at the above chart, Bitcoin’s worst crash lasted 411 days, ending in January of 2015. The nosedive sent Bitcoin’s price plummeting 87% — CoughMtGoxCough.
As of now, the price is already down 64.5% in just the last 51 days. Could it go further down? Perhaps. Will it ever come back to register an all-time high? Yes. Time period? No one knows.
Top Stories from the Crypto World
1. Baidu launches CryptoKitties-Style game ‘Leci Gou’
Search engine giant Baidu has launched a CryptoKitties-style blockchain application in a bid to challenge the popular and lucrative game for supremacy in the Chinese market. The app, called “Leci Gou,” features puppies instead of kittens, but the concept is very similar to CryptoKitties.
Users can adopt digital pets, each of which has unique physical attributes that determine its rarity and value. Owners can breed their digital dogs, or they can sell them to other users.
But while CryptoKitties runs on the public Ethereum blockchain, Baidu has not revealed whether Leci Gou is using a public blockchain or a private one. Another difference is that – Leci Gou only accepts the blockchain’s native token, so users cannot buy and sell pets using actual money unless they facilitate these transactions off the platform.
However, Baidu says that the game is still in beta testing, so it is possible the company will monetize it later on.
2. Lloyds bank stops Bitcoin purchases using credit cards
Llyods Banking Group will, starting today, bar it’s 9 million credit card customers from buying bitcoin and other cryptocurrencies amid fears of future unpaid debts at a time when cryptocurrency prices are on the slide.
According to the report, the bank will set up a ‘blacklist’ that will flag up sellers of cryptocurrencies to keep customers from purchases. The move, according to the Lloyds spokesperson, was to “protect customers” from unaffordable losses.
The report further confirms that the ban will not extend to debit card customers of the banks, who will be able to continue making cryptocurrency purchases with their bank accounts.
3. US Commodities regulator warns on crypto retirement scams
Consumers should be wary of cryptocurrency retirement accounts claiming to be approved by the Internal Revenue Service, the Commodity Futures Trading Commission (CFTC) has warned.
The CFTC is calling for people to “be cautious” about such pitches, especially those claiming that the U.S. tax authority had in some way reviewed or endorsed the product. The IRS, the CFTC noted, “does not approve or review investments for IRAs.”
The agency went on to write:
“Taxpayers tend to focus on retirement savings more at tax time in order to increase deductions or maximize savings. As a result, some businesses may attempt to lure customers into buying highly volatile cryptocurrencies using false claims or by painting virtual currencies as less risky because they can be used for retirement saving.”