Crypto Markets in a Freefall
The cryptocurrency market was trading steadily in Asia and Europe, however, in the early hours of trading in the US today, at about 5.50am ET (10.50 am BT), the digital asset lost more than $500. This drop in Bitcoin’s prices led to a massive freefall in the entire cryptocurrency market, with all the major cryptocurrencies’ prices plunging.
The Freefall
The freefall started with Bitcoin, which dropped more than 5% in a matter of 10 minutes. In fact, the price of BTC briefly fell below the $7k resistance mark, but is now once again trading just above that mark.
The rest of the major cryptocurrencies followed suit. Ethereum plunged by more than 12%, Litecoin fell by 10.9%, Bitcoin Cash dropped 12.6% and Ripple lost 11.8% of its price.
Speculation on Causes of the Freefall
In the last few hours since the prices in the cryptocurrency suddenly fell, there have been a few theories put forward as to the reason this happened.
According to FXStreet’s Tanya Abrosimova, this price plunge was because of popular instant Bitcoin exchange ShapeShift introducing a new registration process. This, according to Abrosimova, may have spooked investors and could be responsible for at least a part of the sudden drop.
However, the more popular theory is that this drop in the cryptocurrency market was in response to banking giant Goldman Sachs shelving its plans to launch a Bitcoin trading desk.
According to the news reports from mainstream media, people familiar with the matter stated that Goldman Sachs had decided to focus on other digital-coin based services, such as custody services for the time being. A Goldman spokesperson stated that the company had not reached any conclusion with regard to their digital asset product offerings.
Goldman Sachs was one of the first Wall Street majors to clear the Bitcoin futures contracts that were offered by Cboe Global Markets Inc. as well as CME Group Inc. back in December last year.
According to a senior market analyst with e-Toro, Mati Greenspan, one of the major themes for this year has been the expectation that Wall Street would adopt cryptos. Therefore, any updates about adoption or rejection was bound to move cryptocurrency prices. Greenspan said that even if the news reports were not true, they would be enough to cause sell-offs such as these ones in the cryptocurrency market.
Wednesday’s sell-off comes after the cryptocurrency market has seen strong gains for the last few days – even after the recent US Securities and Exchange Commission’s rejection of various Bitcoin ETFs.