Crypto prices are free falling and there are no clear reasons for this bearish swing. Bitcoin recently plunged below the $5000 mark. This drop indicates a 75% decline from its all-time high. According to CoinDesk price data, the currency recently reached $4,951.47, its the lowest in over a year.
Everyone in the market is trying to pin down the exact reason for this steep decline. The top speculations that are believed to have influenced this swing are:
- SEC’s Warning: On Friday, SEC (Securities and Exchange Commission) announced that operators of two ICO’s broke laws by selling unlicensed securities. SEC announced that both the ICO’s must pay fines and restitution. SEC has been actively trying to regulate and safeguard the interest of investors, yet, the regulatory space has been in shambles ever since and is likely to shake up the market a few more times.
Airfox and Paragon Coin Inc. were the companies which went against the SEC’s warning. Both Airfox and Paragon Coin Inc. had raised $10 million apiece through these ICOs but had to pay fines and remunerate investors who suffered losses.
- Bitcoin Cash Fork: Bitcoin Cash’s fork last week was very messy and it renewed the centralization concerns over Bitcoin Cash. This could be another factor for the current market state. The Bitcoin Cash fork is probably the major reason behind the deflated price of Bitcoin Cash as well as the rest of the currencies. The dysfunctional and dodgy Bitcoin Cash has triggered the crash and possibly spread contagion to the rest of the market.
- Steep Sales Decline for Cryptocurrency Equipment: Recently Nvidia and Advanced Micro Devices reported a steep sales decline for the cryptocurrency equipment. This decline suggests that the market’s interest in cryptocurrency equipment has waned and might stay put for a while.
- ICO Market Challenges: The ICO market has been suffering lately. The SEC’s crackdown on these digital tokens continues to spook investors. Ernst & Young, a professional services firm sent out a detailed October report. The report highlighted that approximately 86% of ICOs whose tokens were listed on exchanges saw its digital assets lose value.
Both individual and institute investors have lost interest in ICOs due to SEC’s recent actions. SEC in its attempt to regulate the market is taking down ICOs for registration violations. Clearly, this has brought fear in the hearts of investors.
There is an upside to the SECs recent involvement as well. eToro’s senior market analyst for social trading platform said-
“The SEC settlement from Friday was actually good news as it shows a more supportive outlook on crypto startups in the USA,”
Even though the market remains in complete shambles, the regulations and secure investment options that are coming up seem to promise a different tomorrow.
These predictions might or might not have been the major reasons behind the continuous bearish market. The crash might have been a conflation of all the events.