Indeed very disturbing times for the crypto market. Bitcoin tumbled 28 percent in January amid a widespread sell-off that saw just a third of the 15 largest cryptocurrencies by market capitalization rise for the month, according to CoinMarketCap data.

“Altcoins are going to become more dominant,” says CNBC’s Jon Najarian, co-founder Investitute.com. He expects many more cryptofunds will launch and the total market capitalization of cryptocurrencies will quadruple to $2 trillion this year.

Why is Bitcoin’s price down to two-month lows?

Crypto investors are seeing red this week. Bitcoin plunged to two-month lows on Thursday, dipping below $9,000 for the first time since November. As I am writing this article, price of Bitcoin is still dropping and is currently at $7796. It might feel a bit crazy as just recently (few weeks/months ago) the price was almost $20,000. This week has seen coins across the board in the red — a sign that investors are jumping ship to fiat currencies this time instead of swapping into altcoins as we’ve seen in the recent past.
Cryptocurrency die-hards expecting the price to bounce back, even partially, will see these tanking numbers as the perfect entry point for getting in low and maximizing gains. Late speculators who got in during the mass crypto hysteria of the holiday season aren’t likely to have such steady hands, a factor that’s likely contributing to the slide.
So what’s causing the slide to begin with? As usual, no one thing can be blamed for Bitcoin’s current downturn, but recent skittishness around a subpoena for Bitfinex and concerns around Tether — a kind of cryptocurrency counterpart to USD that matches the dollar one to one — probably factor in. Recent news that Facebook would ban ads for ICOs probably didn’t help either. And it seems like every day a new Ponzi scheme gets busted, throwing yet more doubt on the credibility of plenty of less than legit ICOs.

It’ll be interesting to see what happens as we move into next week’s Senate Banking Committee hearings on cryptocurrency. Titled “Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission,” the open hearings will air on February 6 at 10:00 Eastern time. It’s possible that the upcoming discussion in Congress has traders nervous, but ultimately variables from all over the globe combine to affect the market every day.

For anyone considering riding out the current correction, a little historical perspective — in this case, even a few months’ worth — could go a long way.

Sources:

  • nytimes.com
  • techcrunch.com
  • cnbc.com
  • coinmarketcap.com