Ethereum (ETH) prices stabilized on Wednesday after plunging to three-week lows on news that China has officially banned initial coin offerings (ICOs).
China’s ICO Crackdown Lays Waste to Ether
The ETH/USD exchange rate crashed nearly 30% through Monday after China’s financial regulators ordered a halt to ICOs. Seven regulators, including the People’s Bank of China, the Central Network Office and the China Banking Regulatory Commission, issued a joint statement barring the ICO funding mechanism.
The ICO market has exploded since the start of the year, so much so that coin offerings surpassed early stage venture capital during the summer. In total, more than $2.3 billion has been raised through ICOs globally. A staggering 93% of that total has been raised since the start of 2017.
Ether peaked near $400 on Friday before plunging to a low of $278.00 on Tuesday. The decline shaved billions off the world’s No. 2 cryptocurrency, which has shadowed bitcoin all year long.
Ether was down 3% on Thursday to trade at $327.00, according to Bitfinex. The token established a daily range between $321.10 and $337.70.
The ether token is severely overbought, according to the Stochastic RSI. The 14-period RSI is neutral above the 50 range.
Further Clampdown on Cryptocurrency?
China’s relationship with cryptocurrency has been murky to say the least. Policymakers are concerned that digital tokens are being used to facilitate capital flight from the country – a trend that has stoked heavy volatility in the market. This partly explains mainland investors’ fascination with bitcoin and altcoins over the past few years.
According to financial news outlet Yicai, China is poised to further tighten the noose around cryptos. That means it won’t just be the ICO sphere that is under scrutiny, but the market as a whole.
Earlier this year, the People’s Bank of China put a freeze on withdrawals at major Chinese bitcoin exchanges BTCC, OKCoin and Huobi. The freeze has since been lifted.
Cryptocurrency Crash Extends Beyond Ether
Since Sept. 1, the cryptocurrency market has lost $20 billion. It was down by as much as $40 billion through Tuesday.
The worst appears to be over, with 12 tokens now part of the $1 billion valuation club. OmiseGO became the latest addition to the club after prices climbed into the double digits for the first time ever.
Bitcoin (BTC/USD) was down more than 1% on Thursday to trade at $4,555.00, according to Bitfinex. It rose above $4,900.00 last week for the first time in its history.
Cryptos remain far and away the best-performing asset class of 2017.