The cryptocurrency market showed half hearted attempts at recovery in the past months but has continued to falter.
This week, after shedding $13 billion in a day, the bleeding has continued and by Saturday it has become obvious that the market just found stability after losing $18 billion of its total capitalization.
Bitcoin [BTC] started its recent major slide on Wednesday after the recent announcement by the World Bank that cryptocurrencies are vulnerable mainly due to their rapid growth.
The coin this week dipped below $6,200, a figure that it last saw weeks ago. On the 7-day chart, Bitcoin is down by 5 percent. Many altcoins did not fare better with Ethereum [ETH], Litecoin [LTC] and Ripple [XRP] losing between 10 and 18 percent.
This week is just another that has seen the coin market exhibit the volatility which has made regulators wary of giving approval for speculative instruments that would have seen most institutional investors bestow more confidence in the market.
By the beginning of this week, the coin market capitalization was $219 billion, on Friday it was valued $201 billion. This is how the market has shed hundreds of billions of dollars since the beginning of the year.
As usual, there have been speculations on the reason for the recent losses. Rumors made rounds that Bitfinex would suspend fiat deposits on the exchange. This may have raised suspicion of insolvency according to Brian Kelly, the founder and CEO of BKCM.
“That spooked investors a little bit — it was a main cause of the downdraft but we’re seeing prices mostly back to normal,” said Kelly. “Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this.”
Elsewhere, there have been some positive news that could aid the recovery of the coin market. Worthy of not is the indications that the South Korean regulators are considering a regulatory framework that would legalize initial coin offering in the country. A development which if approved would incentivize more adoption in the country.
Bloomberg also reported that the Singaporean regulators are considering modalities that would remove any hindrances exchanges may be encountering in setting up bank accounts.
The capital market has been said to move in opposite direction from the coin market. However, this week has proven once again that no one can accurately predict the coin market, especially in terms of its relationship with external markets.
The US stock market is down 1,300 points this week. This coincides with the coin market losses.
Joe DiPasquale, CEO of hedge funds BitBull Capital, believes that the recent coin market bearish trend is as a result of the losses in the coin market.
“When we saw equity markets crumble, there was some fear in the cryptocurrency market as well,” he said. “I think there was an initial jolt due to larger market activity and the sell off.”
It has become obvious that the coin market would become predictable only after the market matures and analysts certain of its pattern based on history and other extenuating conditions.