Ether, Litecoin Drag Crypto Market Lower in Overnight Trade

The crypto market dipped below $300 billion on Wednesday, as leading digital currencies like Ethereum and Litecoin fell at a brisker pace than their peers. Lacking any major fundamental driver, the recent skid appears to be influenced by Twitter’s sudden ban of cryptocurrency advertising.

Crypto Market Falls Overnight

Cryptocurrencies were down across the board on Wednesday, as daily trade volumes fell back below $15 billion. The combined value of all coins in circulation bottomed just below $294 billion, according to CoinMarketCap. The market later recovered near $297 billion, having declined more than 5% over the previous 24 hours.

Digital currencies Ethereum and Litecoin were among the biggest laggards on Wednesday. Ether bottomed near $445, putting it on track for its lowest settlement since early December. It was last seen trading near $449 for a 24-hour drop of 5%. Litecoin fell nearly 5% to $135 per coin, which was the lowest since early February.

While ether and Litecoin have followed a similar pattern in recent days, market speculation has divided them. On the one hand, Ethereum was the center of positive headlines on Tuesday after Coinbase announced it would extend support to ERC-20 tokens. The ERC protocol is the launchpad of most major coin offerings, which automatically gives Ethereum a major stake in the ICO market.

Meanwhile, Litecoin is facing backlash over the failure of the LitePay merchant processor, a once highly touted platform for consumer-to-business payments. Investors were especially disappointed to hear that the project was canned over an apparent falling out between the Litecoin Foundation and Kenneth Asare, who led the LitePay project.

Twitter Ban Adds to Bearish Risk

Twitter’s sudden decision to ban crypto-related advertising clearly played a role in weakening consumer appetite. However, it’s worth mentioning that the market was already on the back foot long before Twitter confirmed the ban. Although Twitter’s announcement was sudden, it had been in the works for at least a week.

While sound fundamentals usually aren’t needed to influence major moves in the crypto market, knee-jerk reactions to negative news headlines are often short-lived. In the case of Twitter, the ban will play a very minor role in the overall market, as the following research clearly indicates.

To understand the latest downshift in the market, one has to look at the whole picture and not just a small piece of the puzzle. Cryptos began the year on a wild upswing, as speculation in altcoins reached all-time highs. Increased regulatory scrutiny, multiple cyber attacks, shifting technical positions and perhaps even taxes have all soured investor sentiment. This ebb and flow is nothing new and it won’t be the last time cryptos experience a similar pull back.

The only difference this time is there are hundreds of billions of dollars at stake. Despite all the acute risks facing the market, cryptos as a collective have gained more than 1,100% over the past 12 months. In most cases, that would classify as an outstanding investment.

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.

Chief Editor to and Contributor to, 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