The value of all cryptocurrency plunged more than 9% over the weekend, declining from a high of $179 billion to $162.5 billion. Analysts say the correction does very little to alter the technology’s upward trajectory, and may in fact be a way to encourage new buyers to enter the market.
Cryptocurrency Market: Onward and Upward
Even with the latest correction, the cryptocurrency market has increased nearly 60% over the past month and is up 823% since the beginning of the year. There are now 11 digital currency assets with a market cap of at least $1 billion, with the top-100 having a minimum value of $38.7 million, according to CoinMarketCap.
That being said, market dislocations are a major concern for investors. Market dislocation is a condition where investors cease to price assets correctly on an absolute and relative basis. This condition seems to have inflicted bitcoin cash (BCH), which launched on Aug. 1 after a minority of the blockchain community rejected the SegWit2x protocol. Bitcoin cash has faced extreme volatility over its short history as markets struggle to find what it’s really worth.
Bitcoin Prices Rejected Near $5,000
Bitcoin (BTC/USD) approached a new milestone Saturday after prices came within a few dollars of $5,000.00. The BTC/USD briefly touched a session high of $4,991.00 before plunging more than $400 on Sunday.
According to Breadwallet co-founder Aaron Lasher, bitcoin’s market cap could reach $5 trillion in the next decade. In an interview with Market Watch, Lasher acknowledged that the cryptocurrency market is in a bubble, but that the long-term trend is up. However, the path higher will be highly volatile, and may include a brutal bear market correction.
Russia Sees First Criminal Case Involving Bitcoin
Bitcoin was in the headlines last week after Russian police arrested three people for illegally trading in the digital currency. The transactions were reportedly worth 500 million rubles, or roughly $9 million U.S. The Ministry of Internal Affairs says the defendants are being charged with “Illegal Banking.”
Although Russian authorities are keeping an open mind on cryptocurrency, they also want to show it will not be tolerated as a money laundering unit. Russian courts have already set a precedent for blocking bitcoin exchanges, but have not pursued criminal charges.
The cryptocurrency debate is heating up around the world. Earlier this year, Japan formally recognized bitcoin as a form of money. South Korea also appears to be moving in that same direction.