A crackdown on cryptocurrencies by South Korean and Chinese governments has lead to a massive crash in the value of digital currencies, losing a combined $US206 billion overnight.
Dubbed a “cryptocalypse” by traders, the most notable cryptocurrency, Bitcoin, has shrunk back towards its November high of $US10,000, down from its December high of nearly $US18,000.
Other currencies were hit even harder – Ripple dropped by almost 50 percent on the previous day, Ethereum by nearly 34 percent, and Bitcoin Cash by nearly 37 percent. According to Coinmarketcap, the market capitalisation of over 1,300 cryptos dropped by about 30 percent in the last 24 hours, going from $US702 billion to $US496 billion.
While it’s certainly a massive loss, some experts reckon the currency could still recover and reach even higher values.
“It’s been a cryptocalypse overnight with bitcoin and other virtual currencies coming under heavy selling pressure as the regulatory scrutiny intensifies not only in China and South Korea but across the globe,” AxiTrader chief market strategist, Greg McKenna, said. “The debate over zero or $US100,000 for bitcoin this year continues, however.”
Equities and derivatives adviser at ASR Wealth, Shane Chanel, agrees, pointing out that previous dips were followed “by a rally more powerful than the last”.
The drop in value is largely associated with China preparing to block access to cryptocurrency wallets, which are essential to acquiring and storing the digital currencies. South Korea is also considering similar action, though it’s unclear what form this will take.
The current top thread on the Cryptocurrency subreddit is titled, “+1(800)273-8255 – U.S. National Suicide Hotline”, which urges those seriously concerned about their wellbeing after the collapse to seek help.
“If you feel you might be suicidal, and live in the United States, I urge you to call the Suicide Hotline at 800-273-8255 or navigate to http://www.suicidepreventionlifeline.org/ for a live chat and additional resources,” it reads.
If you’re in Australia and having similar worries, you can contact Lifeline on 13 11 14.
While the hype around crypto has been massive over the past 12 months especially, this recent dip in value is a reminder of just how volatile it can be. If you’re looking at investing, make sure you do plenty of research beforehand.