Cryptocurrency market sinks to 10-month low

Cryptocurrencies like bitcoin have declined amid concern that a broader adoption of digital assets will take longer than some had anticipated.
Cryptocurrencies like bitcoin have declined amid concern that a broader adoption of digital assets will take longer than some had anticipated.PHOTO: AFP

SYDNEY • The cryptocurrency bear market plumbed a fresh 10-month low after bitcoin's biggest rival tumbled and United States regulators suspended trading in two securities linked to digital assets.

Ether, the second-largest virtual currency, slumped 8.9 per cent last Friday, according to Bloomberg composite pricing.

Bitcoin lost 2.1 per cent, while the market capitalisation of digital assets tracked by CoinMarketCap.com shrank to US$197 billion (S$272 billion) - down about US$640 billion from its January peak.

Cryptocurrencies have declined for five of the past six weeks amid concern that a broader adoption of digital assets will take longer than some had anticipated. That worry was underscored over the weekend after the US Securities and Exchange Commission temporarily suspended trading in two exchange-traded notes linked to cryptocurrencies, and ethereum co-founder Vitalik Buterin told Bloomberg that the days of explosive growth in the blockchain industry have likely come and gone.

"The temporary suspension of these products led to an initial knee-jerk reaction," said Mr Ryan Rabaglia, head of trading at cryptocurrency dealing firm OSL in Hong Kong. "But ultimately, it's just another obstacle for the market to overcome."

Cryptocurrencies remained under pressure yesterday despite reports that Citigroup has developed a new mechanism for investing in the space. The American bank plans to act as an agent issuing so-called digital asset receipts to enable trading by proxy without direct ownership of the underlying coins, said a person with knowledge of the plans.

Ether, the second-largest virtual currency, slumped 8.9 per cent last Friday, according to Bloomberg composite pricing. Bitcoin lost 2.1 per cent, while the market capitalisation of digital assets tracked by CoinMarketCap.com shrank to US$197 billion (S$272 billion) - down about US$640 billion from its January peak.

The Bloomberg Galaxy Crypto Index of major virtual currencies dropped 4.1 per cent at one point yesterday, heading for its lowest close since mid-November last year. Ether fell to US$199.05 and bitcoin slipped to US$6,313.51.

Ether has tumbled faster than bitcoin in recent months on concerns that blockchain-related firms are cashing out of the No. 2 cryptocurrency.

Many start-ups that raised ether from investors in their initial coin offerings (ICOs) will eventually need to sell their holdings to cover expenses such as salaries and development costs.

"The rhetoric around ICOs continuing to unload proceeds (they raised) on the market remains valid," Mr Rabaglia said. "It's hard to see how that storyline will go away any time soon."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 11, 2018, with the headline 'Cryptocurrency market sinks to 10-month low'. Print Edition | Subscribe