Why cryptocurrencies are unlikely to return to January high following latest price drops
Market value of digital currencies has fallen by $640bn since early 2018
Cryptocurrency values have plummeted to a nine-month low following a major slump in Ethereum over the weekend.
The bitcoin rival’s price plunged by 10% to around $196 (£152) per coin this morning, resulting in the combined value of all digital currencies dropping by $640bn (£495bn) from the market’s peak in January, The Daily Telegraph reports.
Meanwhile, bitcoin fell as low as $6,268 (£4,845) per coin earlier today, marking a 3.7% decline from yesterday’s value, the newspaper says.
The marketwide price cuts are believed to have been sparked by news that the US-based Securities and Exchange Commission’s (SEC) is suspending trading on two cryptocurrency tracking products - Bitcoin Tracker One and Ether Tracker.
According to Reuters, the SEC has temporarily halted trading on the two investment tools because of “confusion in the markets over whether the products are exchange-traded funds (ETFs)” - a form of investment fund that is traded on a stock exchange.
“The SEC has taken a strict stance against letting ETFs tracking bitcoin and other cryptocurrencies come to market,” the news site explains.
The latest drop in cryptocurrency prices is also being attributed to rumours that investment giant Goldman Sachs is scrapping plans to introduce a digital currency trading desk.
Will prices rise again?
Ethereum, along with other cryptocurrencies, is unlikely to soar back to the price highs seen at the end of 2017 and early 2018, according to Ethereum co-founder Vitalik Buterin.
Speaking to Bloomberg, the Russian-born programmer said: “The blockchain space is getting to the point where there’s a ceiling in sight.”
Buterin explained that the period of explosive growth in the sphere is probably coming to an end because the level of superficial awareness about the industry has grown significantly, and is likely to plateau.
“If you talk to the average educated person at this point, they probably have heard of blockchain at least once,” he said. “There isn’t an opportunity for yet another 1,000-times growth in anything in the space any more.”