The cryptocurrency world had quite the scare last week when values crashed 20 percent. The likely culprit for the crash was China’s decision to ban initial coin offerings (ICOs).
The first and most popular cryptocurrency, Bitcoin, dropped as low as $4,319 on Monday, returning to the levels seen at the end of August, before a major spike in valuation. As of writing, Bitcoin has bounced back to $4,66.15.
Other popular currencies, like Ethereum’s Ether, are also bouncing back. Currently, they’re trading at $330.69.
As cryptocurrency is a volitile market, double digit dips and spikes are common. However, one that impacts the entire market is another matter. Without the outside influence of the Chinese decision, we would not likely have seen losses of such magnitude.
The timing was particularly unfortunate for Bitcoin, as it had just reached the astonishing new heights of $5,000.
The silver lining of this major event is that the market is proving to be highly resilient. While surviving a major blow by government regulation may be a sign of continued growth, we also see how vulnerable the market is, especially considering regulations aren’t yet in place. We are likely to see more fluctuations as more countries develop their laws. In such a volatile market, the only thing we can really expect is a bumpy ride.
Disclosure: Several members of the Futurism team, including the editors of this piece, are personal investors in cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.