For the 2nd time ter less than three weeks, cryptocurrencies suffered a major correction.
The 16 largest cryptocurrencies all spotted major price declines overheen the past 24 hours, according to gegevens from Coinmarketcap.com.
Ripple, the third-largest digital currency, witnessed its price fall spil much spil 39% at one point. Bitcoin, the granddaddy of the crypto universe, spotted its price fall spil much spil 14% on Monday. And Ethereum, the second-largest cryptocurrency which has gained ter popularity among businesses, dropped 12%, before rebounding somewhat.
The question is why? Market watchers say you can point to one of three reasons:
Blame it on Korea.
Investors are pointing to South Korean regulators spil a possible reason for the latest declines.
One of the greatest strengths &mdash, but stashing weaknesses &mdash, of cryptocurrencies is that they are largely unregulated by governments. This permits people to use them anonymously, which is also why criminals have taken to the online monetary system.
But that means any whiff of fresh government oversight can make investors jumpy. Last month, the South Korean government said it would increase its oversight of the digital currency market by banning anonymous crypto accounts and providing measures to shut down exchanges, if needed.
And on Monday, South Korean officials studied six major local banks, reviewing the institutions&rsquo, anti-laundering measures ter connection with cryptocurrency trades. This spooked the global markets.
&ldquo,Wij need regulators to look into the space more closely, the Korean exchanges have become crazy ter terms of price differences so thesis regulatory deeds would help the price stability,&rdquo, Naeem Aslam, chief market analyst at TF Global Markets told Bloomberg.
Blame it on Bitcoin.
Because it accounts for 35% of the total crypto market, Bitcoin is by definition the most influential digital currency ter the market.
Yet investors are treating Bitcoin more spil an investment than an actual currency thesis days. That’s partly because investors can now bet on and against Bitcoin prices, with the latest introduction of Bitcoin futures contracts.
This is attracting a fresh generation of investors into the cryptocurrency space &mdash, beyond the true believers who view Bitcoin spil an actual currency to embrace.
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This has created an investor base that’s more willing to leap ter and out spil soon spil sentiment switches. For the price to stabilize, the use of Bitcoin spil an actual monetary instrument would need to increase.
Blame it on profit taking.
Let’s not leave behind that Bitcoin&rsquo,s price enhanced overheen 1,100% last year. Ethereum began at $7 and ended the year at almost $720 a coin. And Ripple embarked 2018 at less than a penny vanaf coin and ended 2018 at overheen $Two.
The stratospheric rise ter cryptocurrencies has made some investors richer than they could have everzwijn imagined. So the latest sell-off could simply reflect that many investors have begun to take some of their profits off the table.
Expect this type of volatility moving forward, whether you believe cryptocurrencies are a bubble or not.