Cryptocurrency Market Claws Back Above $100 Billion After China-Induced Bloodbath
The worst may be over for the cryptocurrency market, as prices stabilized over the weekend following one of the worst routs in recent memory. China’s crackdown on ICOs and bitcoin exchanges triggered a precipitous decline in this new asset class, shaving roughly $65 billion off the market in less than a week.
Market Shows Signs of Stability
As of early Monday, the total value of all cryptocurrencies stabilized above $125 billion, according to CoinMarketCap. On Friday, that figure dropped to as low as $97.55 billion, down from $179 billion just two weeks prior.
The decline has been driven by a broad retreat in bitcoin and several competing altcoins. Bitcoin broke as low as $49 billion on Friday before rebounding sharply over the weekend. The BTC/USD is currently valued at around $3,760.00, according to Bitstamp, for a market cap of $61 billion.
Ethereum’s market value fell to around $18.5 billion, but has since rebounded to $26 billion at a price of $274.00. The world’s No. 2 digital token is up 13% from the previous close.
Despite the bloodbath, there are a dozen cryptocurrencies valued at $1 billion or more.
Chinese Ban Remains in Focus
China’s ban on initial coin offerings (ICOs) and bitcoin exchanges has been at the center of the storm. Although Chinese regulators have left many crypto investors seething, prominent blockchain researchers say the long-term implications could be positive. In particular, long-term bitcoin enthusiast Tuur Demeester says that China’s attack on cryptos will lead to a budding community of decentralized exchanges.
It’s not difficult to see why. The cryptocurrency revolution is more a battle of ideas than anything else. Rather than argue about which crypto will “win,” it’s more useful to view the market as a paradigm shift. The way the world thinks about money has been crucial to human history, and the advent of a monetary exchange outside the grip of governments is a powerful concept that many appear to be shrugging off. (For Mr. Jamie Dimon, it could be the case of sour grapes.)
China’s obsession with over-regulating everything made its attack on bitcoin a foregone conclusion. Chinese policymakers have been routinely intervening in the market after they realized mainland investors were using cryptos to hedge against yuan volatility.
Although the loss of China is a huge blow to the cryptocurrency market, it’ll be interesting to see whether Mr. Demeester’s prediction holds true.