$260 billion ‘cryptocalypse’ as cryptos plunge 30 per cent amid fresh China, South Korea fears
$260 billion ‘cryptocalypse’ as cryptos plunge 30 per
cent amid fresh China, South Korea fears
BITCOIN, ethereum, ripple and other virtual currencies
have been smashed overnight in a bloodbath of Titanic proportions.
South Korea plans to ban cryptocurrency trading
By Frank Chung@franks_chung news.com.au JANUARY 17,
20183:04PM
THE cryptocurrency market has lost $US206 billion
overnight in what traders are describing as a “cryptocalypse”, with bitcoin
heading back towards its $US 10,000 milestone first reached last November.
But it was smaller currencies including ripple, ethereum
and bitcoin cash that were the hardest hit in the latest sell-off, which was
sparked by fresh fears of a crackdown on virtual currencies by governments in
South Korea and China.
At the time of writing, ripple was down nearly 50 per
cent on the previous day, ethereum had lost nearly 34 per cent of its value,
bitcoin cash was down nearly 37 per cent and bitcoin was down 27 per cent to
just under $US10,200.
The market capitalisation of more than 1300 cryptocurrencies
has dropped by around 30 per cent over the past 24 hours, down from $US702
billion to $US496 billion, according to Coinmarketcap.
“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,”
Greg McKenna, chief market strategist at AxiTrader, said in a note on
Wednesday. “The debate over zero or $US 100,000 for bitcoin this year
continues, however.”
Mr McKenna added that while retail investors had chased
bitcoin out of fear of missing out, most institutional investors — with the
exception of dedicated bitcoin funds and traders — would avoid the currency
“because of fear of embarrassment and job loss”. “FEJL is as powerful a
motivator as FOMO,” he said.
Shane Chanel, equities and derivatives adviser at ASR
Wealth, said “not all hope” was lost, pointing out that every previous wild
swing had been followed “by a rally more powerful than the last”.
He added that “every year over the last three years, the
cryptocurrency market has witnessed strong corrections 22 to 23 days prior to
Chinese Lunar New Year”.
It came amid reports China’s government was preparing to
ramp up its crackdown on virtual currencies by blocking access to wallet
services and exchange websites, according to Bloomberg.
China had already banned domestic exchanges and “initial
coin offerings”, and earlier this month signalled its intention to crack down
on bitcoin mining companies in order “guide” them towards an “orderly exit”
from the country.
Meanwhile, South Korea’s finance minister said a
crackdown on cryptocurrencies was still a possibility, describing the current
frenzy as “irrational”.
Kim Dong-yeon told local radio station TBS that banning
trading in digital currencies was “a live option but government ministries need
to very seriously review it”, the Associated Press reported.
“There are no disagreements over regulating speculation
[such as using real-name accounts and levying taxes on cryptocurrency
trading],” Mr Kim said.
Last week, an announcement by South Korea’s justice
minister that the country was preparing legislation to ban cryptocurrency
trading sent shockwaves through the market.
A spokesman for the presidential office later issued a
clarification. “Justice Minister Park’s comments related to the shutdown of
cryptocurrency exchanges is one of the measures prepared by the Ministry of
Justice, but it’s not a measure that has been finalised,” the statement said.
The news has caused outrage in South Korea, one of the
world’s biggest cryptocurrency markets, with a petition opposing the crackdown
attracting more than 200,000 signatures and a fresh poll showing President Moon
Jae-in’s approval rating falling.
Reports have suggested up to three million South Koreans
may have invested in cryptocurrencies, and the country is believed to account
for one-quarter of the global market by transaction volume.
According to industry website CryptoCompare, more than 10
per cent of ethereum is traded in South Korean won, second only to US dollars
which account for around 32 per cent. Nearly 14 per cent of ripple and 5 per
cent of bitcoin is traded in won.
On bitcoin message boards, the mood was grim. “Gentlemen,
it has been a privilege playing with you tonight,” wrote one Reddit user,
attaching a video overlaying falling market graphs with the ending scene from
the film Titanic.
“Survivors of the Titanic got compensated about $22,000
in today’s USD,” replied one user. “Guess that’s my new BTC sell point.”
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