Why is crypto down? This is a question a lot of people ask consistently to have a better understanding of the market.
So why? Why did this happen? I’m not sure if anyone knows the exact reason for this debacle, but here are some speculative reasons that could have led to it:
The recent news out of China not only banning ICOs but any exchanges involved with them. This made people worried about the well-being of coin exchanges and reflects their belief that exchange regulation will hurt future market growth because potential investors will continue to see them as unregulated financial vehicles. If these fears persist, the market could continue to suffer.
Japan is also considering new regulations that would prevent their exchanges from running crypto-to-fiat options. This, again, could be more of a blow to future market growth if this regulation were able to pass. However, it’s not likely because the bill still has many months before taking effect and will need approval from other committees to even be considered for voting on by their full congress.
The popular exchange Bittrex recently disabled new user accounts due to too much traffic overload. Even though they are re-enabling registrations today, there was some panic that ensued at the news of them disabling account creation. It wasn’t anything unique or related directly to anyone coin but just reflected the increasing number of people getting involved in why crypto is down.
The recent SEC ruling on ICOs being securities instead of commodities affected the market by causing a state-wide reversal where every coin saw sharp declines. When the overall market cap was over $100B this regulatory action wouldn’t cause as much fear or uncertainty, but now that it has dropped to around $70B there is a concern. Even though this article says otherwise, I believe that markets are still panicking about this even after the initial hit. If you read through all these articles and comments , you will see that many people are still not happy with how the SEC handled their decision.
Another interesting point is timing. What most people don’t realize is that this market downturn has been happening since Friday, right after the SEC released their ruling. Since then there have been continuous attempts to manipulate the market with low volume sell-offs followed by massive buybacks. We may never know the true intentions behind these actions, but it seems likely that they are intended to cause further volatility and fear to benefit someone or some group.
The last possible explanation for all of this could be simply overreaction on behalf of investors/traders who are now afraid of what regulations will do to their future investments. This was probably triggered by things like China banning ICOs which caused another wave of investors thinking “China banned them – US might too, I need to sell now!”. These actions were probably amplified by bots and high-frequency traders who also realized the market was overreacting and decided to attempt their form of manipulation.
Having said all this, it’s important to realize why crypto is down still in its infancy. All these things are normal, they are growing pains. Even though there will be bumps in the road, crypto has a bright future ahead if we don’t give up on it. The technology will continue to improve with time and none of these minor setbacks mean that decentralized currency is dead or dying; only transitioning into new hands. So watch out for manipulation attempts – you can never be sure why someone is trying to ruin your profits anyway.