Crypto Wipeout Deepens to $640 Billion as Ether Leads Declines
(Bloomberg) -- The cryptocurrency bear market plumbed a fresh 10-month low on Monday as Bitcoin’s biggest rival tumbled and U.S. regulators suspended trading in two securities linked to digital assets.
Ether, the second-largest virtual currency, slumped 11 percent from its level at 5 p.m. New York time on Friday, according to Bloomberg composite pricing. Bitcoin declined 2.4 percent, while the market capitalization of digital assets tracked by CoinMarketCap.com shrank to about $197 billion -- down almost $640 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 U.S. Securities and Exchange Commission temporarily suspended trading in two exchange-traded notes 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 of trading at cryptocurrency dealing firm OSL in Hong Kong. “But ultimately, it’s just another obstacle for the market to overcome.”
Cryptocurrencies remained under pressure on Monday despite reports that Citigroup Inc. has developed a new mechanism for trading them. The U.S. 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.
In a separate report, two financial-technology companies won New York state approval to issue cryptocurrencies pegged to the U.S. dollar, creating more regulated and transparent competitors to so-called stable coins such as Tether, currently the eighth-largest of all digital assets by market value.
The MVIS CryptoCompare Digital Assets 10 Index of major virtual currencies dropped 2.2 percent as of 4:30 p.m. London time, paring a decline earlier on Monday that extended to its lowest level since late October.
Ether has tumbled faster than Bitcoin in recent months on concern that blockchain-related firms are cashing out of the No. 2 cryptocurrency. Many startups 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,” Rabaglia said. “It’s hard to see how that story line will go away any time soon.”
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