Cryptocurrencies Dump $10 Billion as New Zealand Makes Crypto History

Cryptocurrencies declined in unison on Tuesday, as bitcoin returned below $11,000 for the first time in over a week, setting the stage for a deeper correction in the altcoin market. Meanwhile, New Zealand has made crypto history by becoming the first country to permit salary payments in virtual currency.

Crypto Markets Fall

With the exception of bitcoin cash (BCH), all of the top-20 cryptocurrencies traded lower on Tuesday. Week-over-week, crypto markets have lost $21 billion in combined value, according to CoinMarketCap. The asset class is now worth $287.1 billion, down from $296.4 billion just 24 hours ago.

Cryptocurrency market extends its correction below $290 billion. | Source: CoinMarketCap.

While there was no immediate catalyst for the pullback, bitcoin’s gravitational pull on altcoins and tokens likely played a major role. After failing to overcome $12,000 last week, bitcoin has faced renewed selling pressure. That pressure came to a head on Tuesday, as the bitcoin price fell below $10,900 on Bitstamp. It was last down 4% at $10,936.

Bitcoin accounts for more than 68% of the overall cryptocurrency market, so its movements influence other assets directly. Ethereum, XRP, Litecoin, Binance Coin and EOS were all down more than 2% on Tuesday.

As the lone gainer, bitcoin cash rose 2.1%.

Average cryptocurrency prices down across the board on Tuesday. | Source: CoinMarketCap.

Bitcoin has outperformed its peers in recent weeks as investors fled stocks over trade-war fears. For the first time in three years, bitcoin has been moving in lockstep with gold, a sign that investors were treating it as a safe haven.

Read Hacked.com’s latest week-in-review: Bitcoin: The Case for ‘Digital Gold’ Strengthens as Bond Markets Flash Recession Warning

New Zealand Makes Crypto History

Cryptocurrencies have come a long way from their obscure and esoteric origins. This week, one of the world’s most advanced economies became the first to legalize salary payments in digital currencies.

According to the Financial Times, New Zealand will allow salaried employees to be paid with cryptocurrencies beginning on September 1, provided a few conditions are met. The main stipulation is that the digital currency is pegged to a standard currency and directly convertible into paper money.

The ruling was signed into law June 27 and communicated last week in a bulletin from the Inland Revenue Department. According to the bulletin, the payment method will be governed by New Zealand’s income tax scheme and will apply for a period of three years.

Proponents of digital assets are likely to view the new law favorably as it allows cryptocurrencies to be used for everyday payments. Cryptocurrencies like bitcoin have caught on as an investment class, but payment adoption has been lacking. Part of the problem is scalability, something that developers are currently working to resolve.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Chart via CoinMarketCap. 

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi