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The bitcoin bump has turned into a beating

Two of the most popular cryptocurrencies have a bit of a hangover after a wild weekend they're only now starting to recover from.

by Peter A. McKay
Jul 18 2017, 8:00am

Two of the most popular cryptocurrencies have a bit of a hangover after a wild weekend they’re only now starting to recover from.

Bitcoin and ether — both tech-based alternative currencies — essentially crashed over the weekend before rebounding sharply on Monday, racking up the kind of gains in one day that normally take six months or a year in the stock market.

Though no single news event drove the last few days’ dramatic swings, a few occurrences, taken together, help explain the roller coaster.

  • The government in China, the center of cryptocurrency trading, recently took action to reign in speculation throughout the country. After a brief moratorium on withdrawals, three of the China’s popular bitcoin exchanges resumed regular operation in early June, just before the crypto markets’ peak. So it’s safe to assume some of the selling pressure is coming from China.
  • Over the weekend, Chinese President Xi Jinping reiterated the importance of curbing debt and speculation when he announced the formation of a new committee to coordinate regulation. The move spooked the Chinese stock market and could have had an echo effect on the cryptocurrency markets.
  • The global bitcoin market is also facing uncertainty over a proposed software change at the end of the month that would affect the transaction ledger, or blockchain, attached to each coin. If all the market’s major players can’t agree on a single standard, it could effectively “split” the market into multiple parts, with some coins recognized according to one format and some recognized using the other.
  • The total value of all crypto assets tracked by cryptocurrency exchange Coinbase now stands at over $70 billion.
  • At its weekend lows, bitcoin traded below the $1,857 price target set by Goldman Sachs analyst Sheba Jafari in July.

But whatever caused the weekend’s fluctuations, the markets stabilized on Monday. Ether rose almost 9 percent, while bitcoin gained 10 percent. Both, however, are trading well below their June highs; ether is down almost 30 percent, and bitcoin, almost 60 percent.

On the bright side, early buyers of cryptocurrencies have still made a ton of money. Despite the recent downward trend, the price of bitcoin has still nearly tripled over the last 12 months, while ether is up more than 10 times its price a year ago.

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