Crypto wipeout deepens to $640 billion

Ethereum co-founder says days of explosive growth in blockchain likely come and gone

A message on a vendor’s booth is seen on display at the Consensus 2018 blockchain technology conference in New York City, New York. Photograph: Mike Segar/Reuters

A message on a vendor’s booth is seen on display at the Consensus 2018 blockchain technology conference in New York City, New York. Photograph: Mike Segar/Reuters

 

The cryptocurrency bear market plumbed a fresh 10-month low, led by a tumble in Bitcoin’s biggest rival. Ether slumped 9.5 per cent from its level at 5pm New York time last Friday, according to Bloomberg composite pricing.

Bitcoin lost 2.5 per cent, while the market capitalisation of digital assets tracked by CoinMarketCap.com shrank to $197 billion (€169 billion), down about $640 billion (€551 billion) from its January peak.

Cryptocurrencies have declined for five of the past six weeks amid concern that a broader adoption of digital assets will take longer than some had anticipated. That worry was underscored over the weekend after the US Securities and Exchange Commission temporarily suspended trading in two securities linked to cryptocurrencies and Ethereum co-founder Vitalik Buterin told Bloomberg that the days of explosive growth in the blockchain industry have likely come and gone.

“The temporary suspension of these products led to an initial knee-jerk reaction,” said Ryan Rabaglia, head trader at cryptocurrency dealing firm Octagon Strategy Ltd in Hong Kong. “But ultimately, it’s just another obstacle for the market to overcome.”

Under pressure

Cryptocurrencies remained under pressure on Monday despite reports that Citigroup Inc has developed a new mechanism for investing in digital assets. The US bank plans to act as an agent issuing so-called digital asset receipts, or DARs, to enable trading by proxy without direct ownership of the underlying coins, a person with knowledge of the plans said.

The Bloomberg Galaxy Crypto Index of major virtual currencies dropped 4.5 per cent at 12:44pm in Hong Kong, heading for its lowest close since mid-November. Ether has tumbled faster than Bitcoin in recent months on concern that blockchain-related firms are cashing out of the second-biggest cryptocurrency.

Many start-ups that raised Ether from investors in their initial coin offerings will eventually need to sell their holdings to cover expenses like salaries and development costs.

“The rhetoric around ICOs continuing to unload their raise proceeds on the market remains valid,” Mr Rabaglia said. “It’s hard to see how that story line will go away any time soon.”

– Bloomberg