In the past week, the price of Bitcoin and other cryptocurrencies has dropped sharply. The chart below shows the performance of the biggest cryptocurrencies.
In the drop, the total market capitalization of crypto declined by more than $100 billion. Today, the combined market value of cryptocurrencies stands at more than $136 billion. This is an improvement from where it started the week at. It comes from a sharp rally that has happened in the crypto market. In the past two days alone, the price of BTC has gained by more than 15%.
Even with the relief rally, the price of crypto remains at depressed levels. Early this year, the market value of all cryptocurrencies was more than $800 billion. The problems started in January, when investors started to worry about regulations. At that time, enthusiasm in the crypto market was so large that some analysts were starting to see it reaching more than $1 million.
The news of regulations coming from Japan and South Korea was the beginning of a series of bad news that impacted the price. It was followed by the ban of crypto advertising for by Google and Facebook. These companies banned crypto in their platforms to prevent the spread of scams. This was followed by the increased hackings. YTD, crypto worth more than $700 million has been stolen.
Another big hindrance in the industry was the SEC. Many investors expected the SEC to accept the Bitcoin ETFs that were proposed by VanEck. This would have been a game changer because it would have allowed large institutional investors to invest in the currencies. This week, the head of the SEC said that more changes needed to be done to protect investors in the industry.
The negative news in the industry overpowered the positive ones. For example, in the second quarter’s earnings call, the head of Blackrock said that the company was exploring entering the industry. This was big news because Blackrock is the biggest asset manager in the world. However, to date, the company has not provided an update on the plans. This was likely the reason why Fidelity formed a new digital asset company.
With so much negative news coming from the industry coupled with the breaking up of the BTC Cash two weeks ago, the price of Bitcoin has been on a free fall. Since yesterday, the price has however gained by more than 15%, in a relief rally. However, this rally is mostly caused by technical. This means that the price could resume the downward trend again. If it does, it will likely move to below $3500.