Cryptocurrencies shed almost $700 billion since January peak

The cryptocurrency market is facing a very severe sell-off because the investors are scared by the increased talk of regulatory scrutiny and also because of the bitcoin cash idea. Late last week, the total market capitalization of all cryptocurrencies which is calculated by multiplying the prices by the number of tokens in circulation had fallen to about $138.6 billion. This statistics was made available by the CoinMarketCap data. This is the lowest level that cryptocurrencies have fallen to since September 2017, it is an 80% decline which translates to about $700 billion.
Last week, the prices of the bitcoin witnessed a downturn that brought to an end months of stability which is unusual for a volatile asset like bitcoin. This downturn was as a result of the news that the bitcoin cash’s blockchain was about to experience a “hard fork”. This is a phenomenon where by the blockchain is split into two. Forks are simply software upgrades that happen when there is a disagreement on how to scale a cryptocurrency to cope with an increased volume of trading. This was what happened in August 2017 that led to the creation of the bitcoin cash. The fork experienced by bitcoin cash last week led to the formation of two new virtual currencies, “Bitcoin ABC” and “Bitcoin SV”. SV is short for “Satoshi’s vision”, this particular cryptocurrency is the brainchild of entrepreneur Craig Wright who claims to be Satoshi Nakamoto, the inventor of bitcoin.
Because of this split, various cryptocurrencies have fallen with the bitcoin falling below $5,000 and many other digital currencies are following the same trend. As at Friday, the bitcoin which is the world’s largest virtual coin was trading at $4,300, in the same vein, XPR, a digital token associated with the blockchain firm Ripple, dropped 6.7 percent to about 41 cents. Also ether, the digital token of Ethereum blockchain dropped more than 7 percent and is trading for just below $1.22
This huge nose dive in the cryptocurrency market comes on the heels of a report by Bloomberg news that the U.S Department of Justice is investigating whether cryptocurrency traders used a token called tether to buoy the price of the bitcoin. Tether has been a controversial token in the cryptocurrency world, this is because there are raised doubts as to whether it holds enough dollar reserves as the number of tether tokens in circulation. However the tether fell last month to about 93 cents.
It has been a rough month for the cryptocurrency market, and analysts have attributed the continued bitcoin sell-off to technical levels. To worsen this whole situation, the Security and Exchange Commission announced its first civil penalties against cryptofounders as a part of the legal crackdown aimed at the fraudulent activities growing in the digital currency industry.
The cryptocurrency tumbler comes immediately after warnings from Benoit Coeure, an Executive Board member at the European Central Bank. He stated that “Bitcoin was an extremely clever idea. Sadly, not every smart idea is a good idea”. Coeure further stated that “In more ways than one, the bitcoin was bad and would eventually lead to financial crisis”.