The world of cryptocurrency is hit by a bloodbath as the market cap continues to fall down dramatically on the third consecutive day.
The market cap that was initially at $304 billion fell down to $295 billion in a day and in the second and third iterations, it plunged down to $274 billion and as of press time, it has fell down drastically to $262 billion, which is raising questions in the mind of investors regarding the near future of cryptocurrency.
The overview of the market cap shows the depreciation in most of the cryptocurrencies. The market cap shows the usual trend of minimal green and a hugely dominating red.
The continuously plunging behavior of the market over the week seems alarming as the value of the cryptocurrencies in terms of price and volumes fell drastically. The overall market cap has suffered a loss of about $42 billion and it makes a dangerous statement relating to the future of the smaller cryptocurrencies that may see a collapse.
Although some of the currencies tried to bounce back, but 9 out of the top 100 currencies resisting the plunge is still a small number. According to Coinmarketcap:
Most of the expert already predicted that due to the lack of intrinsic value, the cryptocurencies might collapse. According to Goldman Sachs:
..because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.
The noble prize winning economist, Paul Krugman had a similar opinion regarding cryptocurrency, proving that he is crypto skeptic;
Cryptocurrencies, by contrast, have no backstop, no tether to reality. Their value depends entirely on self-fulfilling expectations – which means that total collapse is a real possibility. If speculators were to have a collective moment of doubt, suddenly fearing that Bitcoins were worthless, well, Bitcoins would become worthless.
Even though the market cap lost its financial value drastically in the matter of days, Bitcoin has retained its dominance standing at 48.41% of the total value.
Rejection of the ETF
The price of the cryptocurrency, however, started facing the fall this month when the proposal for ETF by the Winklevoss twins was straight up rejected by the SEC (Securities and Exchange Commission) owing to the fact that there is still the persistence of illegal and fraudulent acts being observed on the crypto market, including price manipulation.
SEC stated that:
Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin or blockchain technology more generally has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.
The proposal of ETF, however is expected to be approved by September. The prices, naturally will stabilize with the approval.
The light of hope
Although a lot of naysayers are involved bringing down the expectations of Bitcoin’s rise. A good proportion of experts providing a ray of light are there. Talking to CNBC, renowned financial analyst, Ran Neu-Ner stated that:
I think 2018 is the year where the mechanisms to allow retail consumers to get into cryptocurrencies start to open themselves up. The price will become more stable.
The co-founder of Reddit stated that:
At the end of the year, Bitcoin will be at $20,000. And Ethereum will be at $15,000 [which he later clarified as $1,500]. Great, now people can call me out if I’m wrong.
Similarly, he also expressed his hopes regarding the bitcoin market saying that:
As volatile as it’s been, we see it continuing [to go] up over the long term, because more and more people are going to look for alternatives to fiat as a store of value as we see currency fluctuations with states failing and other uncertainty, that makes having a digital store of value like bitcoin something that’s desirable, because you don’t have to worry about withdrawing it from a bank or the value disappearing as a government money.
As volatile as the market may seem to be the light of hope seems to be the approval of the ETF when the currencies are expected to bounce back, and as the experts say the coin market cap may hat 1 trillion at the end of 2018.