The cryptocurrency market has experienced yet another major correction, as the price of most cryptocurrencies in the global market declined significantly within the past 24 hours.
Ripple has declined below the $50 billion region, achieving a monthly low at $1.22. As the $10,000 mark was a psychological threshold for bitcoin investors, the $1 mark of Ripple is also an important threshold that led the price of Ripple to increase by 33-fold within several weeks. If the price of Ripple or XRP cannot sustain itself above $1, the market valuation of Ripple could potentially decline further.
However, given Ripple’s massive following in the South Korean market and the large daily trading volumes of XRP on UpBit and Bithumb, two of the country’s largest cryptocurrency trading platforms, it is highly unlikely that the market valuation of Ripple would fall below $40 billion. As of current, the market cap of Ripple is less than half of Ethereum’s. It is not likely that the market cap of Ripple would fall below the current levels unless an unexpected event occurs in the short-term.
Bitcoin has also struggled to maintain the gains it recorded on January 25, as it demonstrated a 5 percent decline in price, from $11,300 to $10,800. Ethereum’s native cryptocurrency Ether along with EOS recorded the lowest losses out of the major cryptocurrencies, demonstrating a slight 2 percent decline in market valuation.
NEM however, the tenth most valuable cryptocurrency in the market, experienced a staggering 16 percent decline in its price. The abrupt plunge in the value of NEM was said to be triggered by a potential security breach which occured on CoinCheck, a leading Japanese cryptocurrency exchange.
On January 26, reports were released by local Japanese media that CoinCheck has disabled all Japanese yen withdrawal and cash outs due to suspicious transactions. Unverified reports claimed that $500 million worth of NEM were withdrawn from CoinCheck and whether it was a group of users or a hacker that stole NEM from the exchange remains unclear.
The cryptocurrency community is anxiously anticipating an official statement from CoinCheck but as of now, it has not been confirmed that the exchange was hacked.
A sudden flow of $500 million from a Japanese cryptocurrency exchange could have triggered the market to fall as well. Several investors suggested that another factor could be the closure of bitcoin future contracts on CME Group, and institutional investors selling large amounts of bitcoin to purposely bring down the currency’s price to cash out short contracts.
Shorting of bitcoin and whales selling the digital currency to cash out short contracts could have realistically contributed to the decline in the market cap of bitcoin, and because bitcoin is considered the reserve currency of the market, the rest of the global cryptocurrency market fell with it.
With US-based residents eyeing tax returns and South Korean investors anticipating the January 31 cryptocurrency exchange resumption date, the global cryptocurrency market would likely recover at a rapid rate throughout early February.
Last modified: March 4, 2021 5:03 PM