Cryptocurrencies are now dropping
The collective market cap of all cryptocurrencies has plunged to $186 billion on Wednesday — its lowest level this year, and the lowest it’s been since Novermber 2017.
It’s a long, painful drop for the crypto market from its January peak of $831 billion, and while everything’s possible in crypto, currently there’s no end in sight.
Bitcoin, the largest cryptocurrency by market cap, is actually holding up well, with a price of $6,281 at writing time, representing a 1.91% loss in the last 24 hours according to CoinMarketCap. This is also a long way from its January peak of over $19,800, but Bitcoin has stubbornly refused to go below $6,000 this year, bouncing back up from that level on several occasions.
But other cryptocurrencies, most notably Ethereum, the second-largest coin by market cap, are losing value at a tremendous pace. At $172, down 11.6% in the last 24 hours, Ethereum has reached a new bottom this year. Just one month ago, the price of one ETH was nearly double; two months ago it was nearly triple that amount.
The reasons behind the decline in price haven’t changed much since last week: Institutional investors, banks and regulators are still wary of cryptocurrencies, perhaps increasingly so in recent months. And numerous startups that raised a lot of money through an ICO (initial coin offering) on the Ethereum platform, are now selling it for fiat money, which creates a selling pressure on the price.
This list, compiled by Diar, shows some of the better known ICO-funded startups and the amount of ETH that’s still in their wallets. It’s been shrinking at an increased pace lately, but there’s still a lot to sell. The authors estimate the total at roughly 3.5 million ETH, worth a little over $600 million, but the actual number is bigger, as numerous successful ICO-funded startups aren’t included in the list.
Vitalik Buterin, the co-founder of Ethereum, has recently been cited by Bloomberg as saying that there’s a “ceiling in sight” for cryptocurrencies and that “there isn’t an opportunity for yet another 1,000-times growth in anything in the space anymore.” This may have contributed to the overall negative sentiment towards Ethereum. Buterin later clarified his comments on Twitter, saying his words have been misinterpreted.
Other major cryptocurrencies aren’t doing very well today either: Ripple is down to $0.26, a 3.7% decrease; Bitcoin Cash trades at $422, a 10.4% decrease, and EOS is at $4.86, a 2.6% decrease. The club of coins with a market cap above $10 billion has shrunk to three (there were more than ten at various points in crypto history): Bitcoin, Ethereum and Ripple, with the last one being on the verge of dropping out.
As a result, Bitcoin’s “dominance” — i.e., the percentage it represents in the total crypto market cap — has jumped to 57.8% according to CoinMarketCap. In March 2017, before the sharp rise of price of Ethereum and other alts (i.e., coins that aren’t Bitcoin), this number was over 85%, but then other cryptocurrencies started to rise and push Bitcoin’s dominance down. Right now, although the entire crypto market is shrinking, Bitcoin is actually re-establishing its dominance over all other coins.
The future for Bitcoin, Ethereum, and the rest of the crypto market is uncertain. The downtrend might end if the SEC decides positively on a few proposed Bitcoin ETFs; a negative decision or further postponement (the decision is currently expected in late September) would likely mean a further decline in price.
Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.