Crypto-crash: Digital currencies still under pressure after broad rout

January 17, 2018

Cryptocurrencies faced further pressure on Wednesday after one of the most severe routs of the past few years, underlining regulators’ warnings over intense tumult in the nascent digital currencies market and sparking pockets of concern among enthusiasts.

Bitcoin, the most widely held digital currency, fell 16.3 per cent on the Bitstamp exchange on Tuesday. Since the start of 2015, there have only been two heavier falls on a closing basis, according to data compiled by Reuters.

The bearish tone has continued into early trading on Wednesday, leaving bitcoin down 3.5 per cent at $10,994. The second and third most valuable cryptocurrencies have similarly faced painful declines over the past few days:

Ethereum has plunged from a high of $1,401 on Sunday to $977.53 on Wednesday, according to coinmarketcap.com
Ripple has plummeted from $2.02 to $1.17 over the same period.

Concerns about a regulatory crackdown have been cited as one of the main reasons for the fall.Bitconnect, which backs a digital coin by the same name, said on Tuesday that it received cease and desist letters from two US state securities offices which typically act as the main regulator for such companies. It said as a result, it had closed its lending and exchange platform.South Korea last week said that it was preparing legislation that would “ban cryptocurrency trading through exchanges”. The country is one of the biggest markets for cryptocurrency.The mood over the past few days across online boards where enthusiasts discuss cryptocurrencies was a mix between sombre and resilient.

“To be in bitcoin and cryptocurrency, is to be in the wild wild west. Only the strong survive. Don’t think in the short term, always think long term,” said one user on Reddit.

“The cryptocurrency market will continue to push through this dip with or without you. Don’t panic sell, remain strong and learn from your experiences!”

On the other end of the spectrum, at least two users posted to the Bitcoin board on Reddit to say they had invested large chunks of their college savings and taken a heavy blow thanks to the big drop.

“I invested my college savings in Bitcoin. Is this a dip or a crash?” asked one user. “I am very scared since I don’t have more money to pay for school starting March. It’s all on cryptos.”

Another person offered a more bullish view: “I lost my college fund to this price drop. I will not be able to pay next semester if the price doesn’t recover but I am confident it will.”

What are your thoughts on the latest bout of volatility? Let us know by emailing adam.samson@ft.com or tweeting to @adamsamson.

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