The recent drop in headliner cryptocurrency prices has been ascribed to everything from the Coinrail hack to increased regulatory scrutiny from the U.S. government.
However, some market observers view it as just another symptom of the general 2018 crypto blues.
The most recent hard dip took place early in the week of June 11, with bellwether crypto Bitcoin reaching a seven-month low near $6,600. In other words, the mainstay cryptocurrency fell about $1,000 in a week.
Nor was the drop restricted to Bitcoin. Frontrunners Ethereum and Ripple fell to just over $500 and $0.55, respectively, a major week-on-week decline.
The dip occurred in concert with two major crypto events – a hack of South Korean exchange Coinrail and an upward tick in regulatory pressure from the crypto-skeptical U.S. government.
The Coinrail hack resulted in the loss of at least $37 million. The exchange subsequently issued a statement saying that 70 percent of the exchange’s funds were not affected. By extension, this means the exchange lost about 30 percent of its total value, a whopping sum.
Although Coinrail estimates that about 80 percent of the stolen funds were subsequently frozen, that represents a hefty chunk of change in a country that only recently became accepting of cryptocurrencies in general.
Regulatory Pressure in U.S.
The second big hit the market faced was news that the U.S. Commodities Futures Trading Commission was investigating four major cryptocurrency exchanges – Kraken, Coinstamp, Coinbase, and Itbit – for possible trader price manipulation. The case is currently being challenged in court, with the defendants claiming a lack of jurisdiction. Cryptocurrencies are not commodities, and most are not in the derivatives market, so the U.S. regulatory agency lacks jurisdiction, they say. While an investigation doesn’t necessarily mean price manipulation is taking place, it nudged an already skeptical market downward, observers have said.
Crypto Watchers Weigh in
Regular crypto watchers might have been shocked by the suddenness and severity of this most recent drop. Yet 2018’s rather depressed market has already exhausted a hefty portion of long-term holders. This most recent dip is nothing more than a continuation of the pattern that the market has been keeping since January, when prices dropped from December’s all-time high to lackluster levels.
In response to a post-dip optimistic post, one user on the Reddit cryptocurrency forum predicted further bloodshed to come.
“The usual post-crash brainwashing post about how the best is yet to come. Prepare another for when Bitcoin sits under $6,000,” the user wrote. “We should stop trying to justify and explain every single market move because it reeks of desperation. If you constantly need to convince people to not sell and buy you look more like a seller in a pyramid scheme than an investor.”
However, at least one user sees the current market as a winnowing process of sorts.
“This carnage in the price markets will be great for killing off the scams and the Ponzi schemes and unearthing the actual projects out there,” the user said. “Of which there are many – it’s just hard to spot them among the dross.”