Happy Thursday afternoon to you, crypto-keepers, long-time readers, and first-time visitors alike. It’s Thursday already, meaning there’s only one more full day of work separating you from the long-awaited weekend. Are you going to fill it with Super Bowl plans like half of America, trying to get the most fun out of your two days off, or are you going to sit at your home computer and bite your nails anxiously to see how much lower bitcoin has to fall, if any? The last 30 days have seen a steady decline in crypto enthusiasm, and the long-dreaded “crypto bubble” has finally burst. How much more “bursting” it must do is anybody’s guess.

Bitcoin Slumps, Driven by Corporate, Government Regulation Woes

Bitcoin was down over 11% on Sunday morning to prices not seen since last November. It extended its 6-week fall from all-time highs set in December, trading as low as $9030 before making a small bounce back upward. The bitcoin market cap subsequently shrank close to 50% in less than 30 days, falling to about $150 billion from its January high of $296 billion.

The price of BTC still remains up over 160% in the last 6 months. This time, the decline in price was being blamed on a combination of worrisome factors as plans to limit cryptocurrency access by both major corporations and world governments were announced earlier in the week. Regardless of the rationale behind why it happened, the cryptocurrency bubble has indeed burst, confirming long-standing speculation of the existence of a bubble by individuals, institutions and world governments alike.

Facebook announced on Tuesday that it would be prohibiting the advertisement of bitcoin and ICOs in an effort to stem the transfer of funds to fraudulent or illegally-operated businesses. The social media giant claims that they are acting to protect its users from “rogue cryptocurrency companies” and that the move is in their best interest. By essentially banning ICO advertising, Facebook has made ICO startups less attractive, decreasing the speculative, potential value of major cryptos bitcoin and Ethereum.

The government of India also announced plans to ban on all cryptocurrency use in the country, pledging to “stamp out” cryptocurrency-based trading, while likening their nature to that of a Ponzi scheme. Meanwhile, bitcoin exchanges in the country seem undeterred, keeping their doors open to new and old customers. The move is speculated to have arisen in response to “a few illegal bitcoin trades” that occurred within India’s borders in 2017. Meanwhile, South Korea’s finance minister reversed threats made in December and January to ban cryptocurrency use, now stating that the country’ immediate goal was to pursue regulation of the technology, rather than making it outright illegal.

BTC wasn’t alone in the mini-crash: 8 of the top 10 cryptocurrencies by market capitalization also suffered double-digit drops over the last 24 hours, as altcoin investors raced ahead of each other to exit cryptocurrency for cash. The result has been the disappearance of close to $100 billion – or 25% – of the total cryptocurrency market capitalization over the course of the last 3 days.

Ethereum Remains Dominant #2 Crypto, Maintains Market Cap

Unlike bitcoin, Ethereum has not suffered a substantial decrease in market capitalization value over the last few weeks. On the contrary, it has enjoyed a steady uptrend in price since January 18th. Because it is relatively easy to trade Ethereum for fiat currency, as opposed to most other altcoins, the value of Ethereum is becoming detached from the price of BTC. Even though the price of ETH in USD remains far below its all-time highs of $1400+ set earlier in January, its price in BTC reached a record Ƀ0.121 early Thursday morning.

The divergence in price from bitcoin signifies that Ethereum’s value is no longer dependent on bitcoin’s success. The clear majority of other altcoins have only BTC as an option for cashing out — the glaring exception being Ethereum-based tokens (ERC20 tokens). While minor changes in price of BTC and ETH usually don’t have much of an effect on other coins and tokens that are paired with them in cryptocurrency exchanges, big gains are associated with increasing investor enthusiasm, in which money flows into second- and third-tier coins, giving them exponential rises in price. Big losses, on the other hand, are associated with decreasing investor enthusiasm, where money flows out of smaller coins on their way to BTC or ETH, before finally being cashed out to fiat. This leads to exponential decreases in price, as are currently being experienced by dozens – if not hundreds – of smaller cryptocurrencies.

Also in the News

  • In Europe, power utility companies are refusing to sell power directly to bitcoin mining operations, which are often seen as wasteful. The state-operated, green power-oriented utility company Enel, stated it has “no interest whatsoever” in providing power to bitcoin miners, a profession regarded as “unsustainable” and not in line with their business models. The words are meant to repel a potential outflux of miners from China as the government there pursues a crackdown on mining operations in the mining-heavy country.
  • Manufacturers of high-end graphics cards NVIDIA and AMD are taking a hit in sales in 2018, the effect of withdrawal after the companies made huge profits in 2017 satisfying the needs of GPU-based cryptocurrency miners. With their equipment high in demand, prices of graphics cards rose, and their availability plummeted throughout the course of the year, leading to a perceived alienation of their core customer base (video gamers). NVIDIA has announced plans to integrate blockchain technology into their product lines, likely as a decision to embrace their newfound crowd of cryptocurrency enthusiasts.
    Although bitcoin can only be mined using SHA-256 ASIC hardware, a flood of rising altcoins can be mined with high-end graphics cards, used only by the gaming community in previous years. For the first time in recent history, the total market cap percentage made up by smaller altcoins surpassed that of Ethereum’s market cap this week, signifying their ever-increasing popularity.