$700 billion came crashing down – the worst fall for cryptocurrencies

The crash in cryptocurrencies is in for its worst week yet. This by far, has been the worst ever time for the crypto market in 2018.

With Bitcoin slipping closer to $4,000 and other cryptocurrencies falling down the steep slope on Friday, the Bloomberg Galaxy Crypto Index’s decline has reached 23 per cent, since November 16. This is the worst weekly slump that the crypto-currency has seen since early January.

After a great performance last year that was beyond expectation and exceeded many of history’s notorious bubbles, cryptocurrencies have declined in a nearly $700 billion retreat that now is narrowing down. Many concerns — including increased regulatory scrutiny, community infighting and exchange snafus – have become even more intense this week.

Even though 70 per cent of the market has fallen for most of the virtual currencies, Oanda Corp.’s Stephen Innes still believes that these are not the signs of submission.

“There’s still a lot of people in this game,” Innes, head of trading for Asia Pacific at Oanda, said by phone from Singapore. If Bitcoin “collapses, if we start to see a run down toward $3,000, this thing is going to be a monster. People will be running for the exits.”

He said that the base-case forecast for Bitcoin will be around $3,500 to $6,500 in the short term, and could fall down to $2,500 by January.

The largest cryptocurrency fell down as much as 7.6 per cent on Friday, before paring losses to 3.7 per cent at 9:04 am on Friday in New York, as per the Bloomberg composite pricing. At $4,266 the trading closed at the lowest since October 2017.

Ether, XRP and Litecoin declined at least 4.5 per cent. As tracked by CoinMarketCap.com, the crypto market has sunk to $139 billion from about $835 billion in January.

The biggest loss bearers are the individual investors who put money as the prices peaked, and the companies like Nvidia Corp. that were on the supplying end of the crypto ecosystem.

The California chipmaker has lost its value and is nearly half the original since the beginning of October. The fall came after the demand for its cryptocurrency mining chips stopped and the results in its gaming division also disappointed.

The impact of cryptocurrencies has so far been limited when it comes to the economy, because of the low exposure that the banks have to virtual currencies. The recent declines in the equity market, $1.3 trillion lost from the market within a week, is more of a concern to the investors than the the $700 billion slump in digital assets since January