INSUBCONTINENT EXCLUSIVE:
By Eric Lam and Yuji NakamuraBitcoin dropped below $6,000 and dozens of smaller digital tokens tumbled as this month’s selloff in
cryptocurrencies showed few signs of letting up.
The largest digital currency fell as much as 6.2 percent to $5,887 as of 3:07 p.m
in Hong Kong, the lowest level since June, according to Bloomberg composite pricing
Ether sank as much as 13 percent, while all but three of the 100 biggest cryptocurrencies tracked by Coinmarketcap.com recorded declines
The total market capitalization of virtual currencies dropped to $192 billion from a peak of about $835 billion in January, erasing much of
the gains seen during the speculative mania at the end of 2017.
“Most cryptocurrencies have been overvalued for a very long time,” said
Samson Mow, chief strategy officer at blockchain developer Blockst ream Corp
“It’s hard to pin this move on any particular factor, but it feels like the opposite of last year when money piled in as people felt
Now it’s piling out as they sense panic.”
While cryptocurrencies rallied in July on hopes that a Bitcoin-backed exchange-traded fund
would attract new investors, U.S
regulators have yet to sign off on multiple proposals for such a product
The letdown has coincided with growing concern that entrepreneurs who raised crypto-denominated funds via initial coin offerings are now
cashing out of holdings such as Ether, the token for the Ethereum blockchain that is a popular platform for crypto projects.
“The big
story in the market today is the huge weakness in Ethereum,” Timothy Tam, chief executive officer of CoinFi, a cryptocurrency data
analysis company, said in a phone interview
“Bitcoin has held up relatively well versus Ethereum
It’s still quite weak versus the U.S
dollar.”
At the height of Ether’s rally last year, the digital coin comprised 32 percent of cryptocurrency market capitalization, coming
within striking distance of Bitcoin’s 39 percent
Ether now makes up about 14 percent, while Bitcoin accounts for 54 percent after falling less quickly than its smaller peers, according to
Coinmarketcap.com.
“ICOs that have raised a lot of money are really feeling a lot of pain” as their crypto holdings lose value, Tam
said.
Ether has tumbled 39 percent this month, while Bitcoin has dropped about 22 percent.
It’s unlikely that recent global market
turbulence, fueled by Turkey’s currency crisis, is impacting cryptocurrencies, said James Quinn, head of markets at Kenetic, a blockchain
company with investment and advisory businesses.
“Correlations historically have been extremely low between cryptocurrencies and other
asset classes,” he said in a phone interview from Hong Kong
“Which is one of the reasons why there is interest in this space and why people want to make an allocation in this space.”
Still, anyone
expecting Bitcoin to provide a haven from turbulence in global markets will have been disappointed
The cryptocurrency’s slide against the dollar this month is almost as big as the Turkish lira’s 25 percent slump.
